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Managerial Accounting Research Paper
Pages 5 (1255 words)
Total company is a French company whose headquarters is in Paris, it is an oil company whose business includes oil and natural gas exploration, refining, marketing and transportation of oil products. The total company was founded in 1924 and was referred to as the French company of petroleum…
This is a Liquidity ratio that indicates the firms position in meeting its financial obligations in the short run, the current ratio is determined by dividing the current assets by the current liabilities, for total company we determine the current ratio over the last three years:
From the above table it is evident that for the last three years from 2005 to 2007 the current ratio range is 1.27 to 1.35. Creditors will prefer a higher ratio because it reduces the risk of repaying the amount owed. On the other hand investors prefer a lower current ratio and this is due to the fact that a lower current ratio indicates that the company is utilising its assets more in their operations.
The debt ratio is a measure of a company's solvency; this ratio is calculated by dividing the total debts by the total assets, it a measure that indicates the credit worthiness of a company, the following is the debt ratio of the total company for the period 2005 to 2007.
The debt equity ratio indicates whether a company finances more using debts or equity, this is an important ratio in that it helps in decision making whereby a company may want to raise more capital either through debt o ...
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