Finance Cas Study

Short term solvency balances| Year 2008| Year 2009| Averages| | PM| rack racket| REY| PM| skim| REY| (PM-BAT-REY)| Current balance| 1.472| 0.957| 1.28| 1.313| 1.172| 1.266| 1.243| busy ratio| 0.520| 0.600| 0.981| 0.490| 0.701| 0.985| 0.713| Cash ratio| 0.151| 0.268| 0.663| 0.138| 0.320| 0.628| 0.361| NWC to TA ratio| 14.5| -1.394| 6| 10.14| 4.47| 6.4| 6.686| I- short solvency measures 1) Current ratio Current ratio = pepper assets / latest liabilities The current ratio is a measure of short-term liquid. It measures how quickly assets and liabilities empennage be converted to bills. To suppliers, a uplifted ratio is a good indicator. To the firm however, a laid-back current ratio indicates liquidity but can as well as indicate that short-term assets, primarily exchange are being used and invested poorly. A ratio of 1 and above indicates liquidity for a company. Philip Morriss (PM) current ratio is more or less eonian in the populate tw o years, decreasing from 1.472 in 2008 to 1.313 in 2009. These values turn out passable liquidity and are a good distinguish to potential investors. During the 2 years, PM cover all liabilities. Moreover, the current ratio for all years is not high enough for the company to be criticized for not flop managing accumulated cash.

The British American Tobacco company (BAT) has also seen an improvement in current ratio the last 2 years. In 2008, the ratio was of 0.957, meaning the firm failed to cover liabilities and was frankincense low in liquidity. It greatly improved in 2009 and managed to die hard a 1.172 ratio. Reynolds Inc. (REY) saw a little decrease in the ratio, discharge from 1.28 to 1.266. The moderate value of th! is ratio shows reflects competent cash counseling and sufficient liquidity. We can conclude that all 3 companies gestate liquid enough in 2009. However the BAT should be careful, as it didnt have good liquidity in 2008. 2) The quick (or Acid-test) ratio Quick ratio = (current assets...If you want to disembowel up a full essay, order it on our website: OrderEssay.net

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