liquidity of a company, Financial Management

Assignment Help:
Eco Tyre Ltd. (ETL) - incorporated in year 2003 and entered into automobile tyre manufacturing business by introducing a new tire manufacturing technology. Over the years, ETL has been recognized as a tyre market leader. But, now a day, ETL is facing hard time due ineffective control of its working capital items.

Following data has been developed from its comparative balance sheets:

Ratio FY 2010 FY 2011
Current Ratio 0.60 Times 0.79 Times
Quick Ratio 0.45 Times 0.61 Times
Return on Asset 9.7% 12.5%
Inventory Turnover 28 Times 15 Times
Avg. Collection Period 13 Days 24 Days
Short-term Debt 4 million 4 million
Total Asset Turnover Ratio 2 Times 5 Times
Credit Sales to Cash Sales Ratio 0.45 Times 0.67 Times

Required:
Being a financial analyst, do you think the liquidity of a company is satisfactory?
Support your answer with logical reasoning.



Related Discussions:- liquidity of a company

Can a corporation have too much working capital, Can a corporation have too...

Can a corporation have too much working capital?  Explain. A firm can have in excess of working capital if it is losing the opportunity to invest in high returning fixed assets

Techniques of inventory control, Examine the reasons for holding inventorie...

Examine the reasons for holding inventories by a firm & also discuss the techniques of inventory control

Estimate the npv of the project?, Wing Yin Tsui, CEO of Lian Huang & Wong B...

Wing Yin Tsui, CEO of Lian Huang & Wong Bin Dean Hwang Manufacturing Limited is considering a four year project. The project requires an initial investment of $10,000,000 to buy ne

Gordon`s dividend capitalisation model , Considering the following informat...

Considering the following information, what is the price of the share as per Gordon’s Model? Details of the Company Net sales Rs.120 lakhs Net profit margin 12.5% Outstandi

Performance budget, Performance budget: it involves evaluation of the perf...

Performance budget: it involves evaluation of the performance of the organization in the context of both overall and specific objectives of the organization. As per the National I

Leverage, Evaluate the importance of leverage of financial management on a ...

Evaluate the importance of leverage of financial management on a small scale company.

Stock price calculations, I need help working through this problem. What is...

I need help working through this problem. What is the stock price of Firm X when provided the following information? Beta – 1.42 MRP – 10% Rf – 3% G – 4% Dividend next period-

Forex, I am looking for assignment help on the topic FOREX. It would be gre...

I am looking for assignment help on the topic FOREX. It would be great if anyone help me.

Significant performance indicators, Significant Performance Indicators ...

Significant Performance Indicators   Following are the most commonly used performance indicators used to assess the financial, and general health of any company:   Gro

Write Your Message!

Captcha
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!

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