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

Give brief introduction to financial management, Introduction to Financial ...

Introduction to Financial Management Companies don't work in a vacuum, isolated from everything else. It transacts andinteracts with the other entities present in economic envi

What are the benefits of collecting early and how it attempt, What are the ...

What are the benefits of "collecting early" and how do companies attempt to do this? A fund has time value.The sooner money is collected the better.  Companies utilize regional

Describes the certainty equivalent coefficient method, Q. Describes the Cer...

Q. Describes the Certainty Equivalent Coefficient Method? Introduction: - Certainty equivalent coefficient process which makes adjustment against risk in the estimates of futur

Calculate super normal profit, The economic analysis is done for Schlumberg...

The economic analysis is done for Schlumberger, oilfield service company. They are # 1 in terms of market caps, revenue and employees globally. If any references are used / outside

Calculate the net present value and payback period, Sarkozy Ltd is consider...

Sarkozy Ltd is considering the selection of one of a pair of mutually exclusive investment projects. Both would involve purchase of machinery with a life of five years. Projec

Income statement and balance sheet, The following are extracts of the Incom...

The following are extracts of the Income Statement and Balance Sheet for Umar plc. Extract Balance Sheet at 30 June 20X2               20X1 £'000  £'000                £

Calculate the average interest rate , At the end of 1922, your great grandf...

At the end of 1922, your great grandfather (g.g.f.) established a trust fund to be used in order to help a later generation of the family obtain a university education. The ultimat

Case study, what are the assumptions of MM(Modigliani Miller) approach

what are the assumptions of MM(Modigliani Miller) approach

Capital market, Capital market: The term capital market is used to deno...

Capital market: The term capital market is used to denote all the activities of the primary and secondary markets. It can also refer to the market for equity and debt instrumen

present price of the common stock , Church Inc. is currently enjoying rela...

Church Inc. is currently enjoying relatively high growth because of a surge in the demand for its latest product.  Management expects earnings and dividends to grow at a rate of 25

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