User Account

All Pages

The ability towards meeting short-term obligations

Assignment Help Operation Management
Reference no: EM132107699

Discuss a financial ratio and how financial managers, lenders, and investors use them in their investment decisions.

The current ratio refers to a liquidity ratio, which measures a firm's capability of paying short and long-term obligations (Awais et al., 2015).

This ratio measures the ability towards meeting short-term obligations with short-term assets.

Financial managers, lenders, and investors use this ratio in ensuring that the firm is able to pay its bills, expenses as well as salaries on time.

When a current ratio of less than 1, it shows liquidity problems.

When there is a very high current ratio, this means an excess of unused cash that can be invested somewhere else. A ratio is believed to be optimal when it is between 1.2 and 2 (Awais et al., 2015).

Accounts receivable is used in the current ratio. There are responsibilities of the organization to disclose information in regards to AR that is not collectable.

Think of a situation where the current ratio is very misleading as an indicator of short-term, debt-paying ability?

As an investor what other information might you find on a balance sheet that could be incorrect and effect the current ratio?

Reference no: EM132107699

Questions Cloud

What are the roles of the individuals in the scenarios : What are the roles of the individuals in the scenarios? What distinguishes management from leadership and managers from leaders?
Personal mission statement and share : When you feel comfortable that you know what your most deeply-held values and goals are, personal mission statement and share it to the discussion board.
Identify one of the significant risks finance companies fac : Briefly differentiate between a commercial bank and a consumer finance company. What is the most significant difference between these two?
Guide career and life decisions : Reflect on how you will use your personal mission statement to guide your career and life decisions.
The ability towards meeting short-term obligations : When there is a very high current ratio, this means an excess of unused cash that can be invested somewhere else.
Style for persons to ensue : What is the best leadership style for following persons to ensue, a CEO of a large multinational company and CEO of a law firm. Explain.
What is the primary purpose of a supply chain : What is the primary purpose of a supply chain? Give an example of a supply chain functioning in the aviation industry
Rigour of strategic management : Not-for-profit organisation do not need the rigour of strategic management as compared to commercial organisations.
Strategy in conflict-communication management : In a large multi-national company there are 2 senior managers who were chosen to represent the company at an international road show.

Reviews

Write a Review

Operation Management Questions & Answers

  Book review - the goal

Operations Management is about a book review. Title of the book is "Goal". This book has been written by Dr. Eliyahu Goldartt. The book has been appreciated by many as one of those books which offers an insight into the operations and strategic capac..

  Operational plan in hospitality enterprise

Operational plan pertaining to a hospitality enterprise is given in detail in the solution. The operational plan is an important plan or preparation which gives guidelines regarding the role and responsibilities of each and every operation at all lev..

  Managing operations and information

Recognise the importance of a strategic approach to the development and deployment of organisational information systems. Demonstrate an understanding of the importance of databases and their integration to the organisation's overall information mana..

  A make-or-buy analysis

An analysis of the holding costs, including the appropriate annual holding cost rate.

  Evolution and contributor of operations management

Briefly explain Evolution and contributor of Operations management.

  Functions and responsibilities of an operations manager

A number of drivers of change have transformed the roles, functions and responsibilities of an operations manager over recent years. These drivers have not only been based on technological innovations but also on the need for organisations to develop..

  Compute the optimal order quantity

Compute the Optimal Order quantity of DVD players. Determine the appropriate reorder point.

  Relationship to operations practice in the organisation

Evaluate problems in operations and identify approaches to overcoming them. Critically evaluate operating plans and identify areas for improvement. Justify, implement and evaluate changes to operations in line with modern approaches.

  A make or buy analysis

Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.

  Prepare a staffing plan

Prepare a staffing plan showing the change of your unit from medical/surgical staffing to oncology staffing.

  Leadership styles in different organizations

Ccompare the effectiveness of different leadership styles in different organizations

  Risk management tools and models

Be able to understand the concept of risk, roles and responsibilities for risk management and risk management tools and models.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd