Bigger Isn't Alway Better

incumbent dimension: ( 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 over the years. The Current proportionality measures the effectiveness of the company to repay shortly 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 understanding for the current liabilities increase was the short landmark bank loans. as well the current assets, especially the cash and marketable securities have slackd good (by 88%). That huge increased in current liabilities and decrement 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 m easures the effectiveness of the company to repay short landmark 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 sheath 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 wet he will notice that either accounting or not accounting for inventory, the ratios will show the same replica which is that the firm has lost th e capacity to repay short term debt with sho! rt term assets, and therefore in a stumble of emergency the firm doesnt have enough assets to retain its liabilities in the short term. Asset enjoyment Ratios Asset use of goods and services ratio: (Revenue / tally Assets) 20002001200220032004 .94.83.78.891.05 Inventory Utilization ratio: (Inventory/ aggregate Assets) 20002001200220032004 1.921.99...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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