Mark Angelo, to repay the debt as well as his net asset value, in addition to the assets which Mr. Mark Angelo can offer to the bank as security against the debt .
Financial Statement Analysis
The financial statement analysis of Mark Equipment Pty Ltd for the present and the past year reveals the following ratios.
The examination of the short-term liquidity of an organization can be accomplished through the current ratio, quick ratio and the cash ratio of the organization. The current ratio signifies the organization’s capability to meet its current liabilities and obligations comfortably. The quick ratio exhibits the capacity to meet the urgent liabilities. The cash ratio is beneficial for creditors to determine how quickly the organization can pay off its short-term debt . In this context, it can be observed that the company’s liquidity position had improved from that of the previous year, but it would be preferable if Mark Equipment Pty Ltd could increase the percentage of their current assets. The solvency of an organization can be evaluated through the debt to equity ratio.
The debt to equity ratio signifies the amount of assets that were financed by debt relative to the amount financed by equity . Thus, Mark Equipment Pty Ltd had utilized comparatively lesser amount to debt to finance its assets and is less financially leveraged. The profitability of the company as indicated by the net profit margin and the return of equity as well as that on assets is very low. Therefore, it can be inferred that the company had not utilized its assets and equity proficiently4. In contrast the gross profit margin of the company is very high, implying that the company’s operating expenses are elevated. The fixed asset turnover ratio of the company indicates that it generates fairly decent value of revenue per unit currency of its fixed assets5. However, the total asset and the equity turnover ratios of the company are relatively low and have also decreased from the previous year. Consequently, the financial analysis reveals that though the company possesses decent values of revenue as well as gross profit and