Liquidity Ratio

LIQUIDITY RATIO dimension analysis expresses the affinity among selected items of fiscal rehearsal data. Liquidity proportion is one of the three ratios, it measures short-term magnate of the company to pay its maturing obligations and to sports meeting unexpected necessarily for bullion. beatnik the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. Short-term creditors such as bankers and suppliers ar particularly interested in assessing liquidity. dimensions include the certain ratio, the latest cash debt coverage ratio, the receivables overturn ratio, the average army period, the size up turnover ratio, and average days in inventory. Current Ratio - Expresses the relationship of true assets to circulating(prenominal) liabilities. puzzle out the current ratio for Kellogg for 2007 and 2006 What do the measures tell us? A current ratio of .67 inwardness that for every dollar of current lia bilities, Kellogg has $0.67 of current assets. Cash Debt reporting Ratio - Because it uses cash pictured by operating activities, it may provide a better agency of liquidity. Calculate the ratio for Kellogg for 2007 and 2006 Is the coverage adequate? Probably so. Kelloggs coverage is better than that of public mill around, and it approximates a commonly accepted threshold of .40.

Receivables Turnover Ratio Measures the number of times, on average, a company collects receivables during the period. Calculate the ratio for Kellogg for 2007 and 2006. How does Kelloggs turnover correspond to General Millss? The turnover of 11.9 times compares favorably with the industry average of 11.5 times, only is lower than G! eneral Millss turnover of 13.3 times. second-rate Collection Period Converts the receivable turnover ratio into days. Calculate the accumulation period for Kellogg for 2007 and 2006. How efficient is Kelloggs credit and collection policies? General rule - collection period should not greatly exceed the credit term...If you compliments to get a plenteous essay, order it on our website: OrderEssay.net

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