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 suppleFixs liquidity position has weakened all over the years. The Current proportionality measures the effectiveness of the company to repay unequal 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 designer for the current liabilities increase was the short confines bank loans. in addition the current assets, especially the cash and marketable securities have slackd slowly (by 88%). That huge increased in current liabilities and belittle in current assets has caused the Current proportionality 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 Qui ck ratio measures the effectiveness of the company to repay short enclosure 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 illustration 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 loaded he will notice that either accounting or not accounting for inventory, the ratios will show the same reproductive memory which is tha t the firm has lost the capacity to repay sh! ort term debt with short term assets, and therefore in a berth of emergency the firm doesnt have enough assets to assert its liabilities in the short term. Asset enjoyment Ratios Asset employ ratio: (Revenue / tally Assets) 20002001200220032004 .94.83.78.891.05 Inventory Utilization ratio: (Inventory/ full(a) Assets) 20002001200220032004 1.921.99...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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