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 readyFixs 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 yard for the current liabilities increase was the short verge bank loans. too the current assets, especially the cash and marketable securities have slackd advantageously (by 88%). That huge increased in current liabilities and fall 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 Quick ratio measure s the effectiveness of the company to repay short marches 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 obiter dictum 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 firm he will notice that either accounting or not accounting for inventory, the ratios will show the same spawn which is that the firm has lost the capacity to repay short term debt with shor! t term assets, and therefore in a trip up of emergency the firm doesnt have enough assets to advocate its liabilities in the short term. Asset enjoyment Ratios Asset usance ratio: (Revenue / tally Assets) 20002001200220032004 .94.83.78.891.05 Inventory Utilization ratio: (Inventory/ hit Assets) 20002001200220032004 1.921.99...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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