Bigger Isn't Alway Better

incumbent symmetry: ( 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 nimbleFixs liquidity position has weakened all over the years. The Current proportionality measures the effectiveness of the company to repay piffling 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 spring for the current liabilities increase was the short status bank loans. in addition the current assets, especially the cash and marketable securities have slackd good (by 88%). That huge increased in current liabilities and drop in current assets has caused the Current proportion 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 measures the effectiveness of the company to repay short verge 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 antecedent 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 rigorous he will notice that either accounting or not accounting for inventory, the ratios will show the same reproduction which is that the firm has lost the capacity to repay short term debt with short term assets, and therefo re in a slip of paper of emergency the fir! m doesnt have enough assets to remain 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/ come up Assets) 20002001200220032004 1.921.99...If you want to get a full essay, order it on our website: OrderEssay.net

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