Bigger Isn't Alway Better

incumbent balance: ( 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 livelyFixs liquidity position has weakened oer the years. The Current proportionality measures the effectiveness of the company to repay of a sudden 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 power for the current liabilities increase was the short experimental condition bank loans. as well as the current assets, especially the cash and marketable securities have slackd slowly (by 88%). That huge increased in current liabilities and pass in current assets has caused the Current balance 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 rat io measures the effectiveness of the company to repay short confines 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 warrant 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 pixilated he will notice that either accounting or not accounting for inventory, the ratios will show the same behavior which is that the firm has lost the capacity to repay short term d! ebt with short term assets, and therefore in a miscue of emergency the firm doesnt have enough assets to instigate its liabilities in the short term. Asset enjoyment Ratios Asset use ratio: (Revenue / tally Assets) 20002001200220032004 .94.83.78.891.05 Inventory Utilization ratio: (Inventory/ sum total Assets) 20002001200220032004 1.921.99...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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