Final Project - Essay Example

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Final Project

The liquidity ratios assesses a company’s ability to meet short term obligations, profitability ratios helps in assessing a company’s profitability and solvency ratios helps in gauging a company’s ability to meet long term obligations. Ratio analysis helps in identifying various trends and helps in identifying potential strengths and weaknesses of a company. The following is the ratio analysis of MNQ Company: Liquidity Ratios: The current ratio is an indicator of company’s liquidity and helps in assessing the company’s ability to meet short term obligations. MNQ Company’s current ratio has remained under 1 for the 5 years from 2004 to 2008. This shows that the company is facing liquidity issues since the current liabilities are greater than current assets. ...
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Summary

Financial Ratios for MNQ company: Formula 2008 2007 2006 2005 2004 Current ratio Current Assets/Current Liabilities 0.92 0.98 0.94 0.98 0.91 Quick ratio (Current Assets-Inventories)/Current Liabilities 0.69 0.73 0.71 0.73 0.68 Cash ratio Cash and cash equivalents/Current Liabilities 0.19 0.20 0.20 0.20 0.19 Total debt ratio Total Assets-Total Equity/Total Assets 59.09% 57.36% 56.35% 58.07% 64.20% Times interest earned EBIT/Interest 11.43 13.53 14.32 7.88 14.23 Cash coverage EBIT+(Depreciation & Amortization)/Interest 18.57 14.29 18.19 8.08 17.34 Inventory turnover ratio Cost of Goods Sold/Inventory 1.80 2.04 1.15 1.80 1.28 Receivables turnover ratio Sales/Accounts Receivable 1.85 1.88 1.77 1…
Author : wolfcoralie

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