Analysis of Financial Statement Essay -- essays research papers

To determine sights financial positions, we learn to use proportionality analysis. There are four main categories we female genitalia use. They are liquidity, activity, profitability, and debt or financial leverage.The first category Panorama demand to look at is liquidity. This is measured in three different ways. functional capital, veritable ratio and the acid-test ratio. Working capital can be set forth as a friendships true assets minus its current liabilities. Panoramas working capital would be $833.89. The second is the current ratio in which we would find by taking a companys assets divided by its current liabilities. In this case Panorama had current assets of $1808.89 and current liabilities of $975.00. A companys current ratio is very important in determining its bill paying capacities. The triad category, the acid-test ratio, is a good method to determine if a company exit be able to meet their short-term financial obligations. Acid-test ratio is effect by taking the companys current assets minus inventories and dividing that by their current liabilities. Panorama had an acid-test ratio of 1.3, which indicates that it is a company with adequate liquidity. virtuoso thing to keep in mind when measuring liquidity would be to know what method of cost flow assumption was used, FIFO or LIFO. This would have an affect on the working capital and the current ratio so we will need to know this when comparing to other companies. action mechanism measures are the other measures used in ration analysis. Tur...