Finance Cas Study

Short term solvency balances| course of instruction 2008| Year 2009| Averages| | PM| wring racket| REY| PM| shave| REY| (PM-BAT-REY)| topical balance| 1.472| 0.957| 1.28| 1.313| 1.172| 1.266| 1.243| restless symmetry| 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 = stream assets / circulating(prenominal) liabilities The contemporary ratio is a measure of short-run liquid state. It measures how pronto assets and liabilities empennage be converted to bills. To suppliers, a high ratio is a healthy indicator. To the trusty however, a high electric current ratio indicates liquidity only can as wellspring as indicate that short-run assets, primarily cash be being used and invested poorly. A ratio of 1 and in a higher place indicates liquidity for a familiarity. Philip Morriss (PM) current ratio is more than or less perennial in the last both years, decreasing from 1.472 in 2008 to 1.313 in 2009. These values show teeming liquidity and are a good sign to potency investors. During the 2 years, PM dispense every(prenominal) liabilities. Moreover, the current ratio for all years is not high enough for the company to be criticized for not correctly managing accumulated cash.

The British American Tobacco company (BAT) has in like manner seen an improvement in current ratio the last 2 years. In 2008, the ratio was of 0.957, mean the firm failed to cover liabilities and was thus low in liquidity. It greatly improved in 2009 and managed to pass on hard a 1.172 ratio. Reynolds Inc. (REY) see a little flow in the ratio, going from 1.28 to 1.266. The hold value of this ratio shows reflects efficient cash management and adequate liquidity. We can conclude that all 3 companies look liquid enough in 2009. til now the BAT should be careful, as it didnt have good liquidity in 2008. 2) The nimble (or Acid-test) ratio Quick ratio = (current assets...If you fatality to suck up a full essay, order it on our website: Ordercustompaper.com

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