Bigger Isn't Alway Better

incumbent proportion: ( oc up-to-date Assets/Current Liabilities) 20002001200220032004 6.383.683.563.623.74 bustling Ratio: (Current Assets Inventory)/Current Liabilities 20002001200220032004 2.542.00.57.61.62 ready(a)Fixs liquidity position has weakened oer the years. The Current proportionality measures the effectiveness of the company to repay get around marge debt with its short bourneinal figure assets. It stands out that in in 2001 Quickfixs flowing liabilities increased from $65,000 to $160,000 a 246% increased. The main fence for the current liabilities increase was the short edge bank loans. to a fault the current assets, especially the cash and marketable securities have slackd easy (by 88%). That huge increased in current liabilities and simplification in current assets has caused the Current dimension to decrease from 6.38 to 3.68 a 57% decreased. From 2001 to 2004 the current ratio has stayed stable in the 3.68-3.74 range. The Quick ratio me asures the effectiveness of the company to repay short edge debt with its short term assets excluding the inventory. Similarly to the current ratio, the quick ratio had a significantly decreased from year to year. In this lawsuit the decrease was in 2002 from 2 to .57, roughly a 30% decreased.

The clear reason for this decrease is the substantial increased in inventory in 2002 from $270,000 to $500,000. So, if Andre wants to assess the liquidity position of the blotto he will notice that either accounting or not accounting for inventory, the ratios will show the same didactics which is that the firm has lost t he capacity to repay short term debt with sh! ort term assets, and therefore in a chemise of emergency the firm doesnt have enough assets to keep its liabilities in the short term. Asset enjoyment Ratios Asset recitation ratio: (Revenue / tally Assets) 20002001200220032004 .94.83.78.891.05 Inventory Utilization ratio: (Inventory/ wide-cut Assets) 20002001200220032004 1.921.99...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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