Liquidity Ratio

LIQUIDITY RATIO dimension analysis expresses the affinity among selected items of financial rehearsal data. Liquidity proportion is one of the three ratios, it measures short magnate of the company to pay its maturing obligations and to escort unexpected take 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 atomic number 18 particularly interested in assessing liquidity. balances include the catamenia ratio, the stream cash debt coverage ratio, the receivables overturn ratio, the average army period, the history turnover ratio, and average days in inventory. Current Ratio - Expresses the relationship of true assets to incumbent 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 liabilities, Kellog g has $0.67 of current assets. Cash Debt reporting Ratio - Because it uses cash pictured by operating activities, it may provide a better government 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 certain 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 contrast to General Millss ? The turnover of 11.9 times compares fav! ourably with the industry average of 11.5 times, only is lower than General Millss turnover of 13.3 times. second-rate Collection Period Converts the receivable turnover ratio into days. Calculate the ingathering period for Kellogg for 2007 and 2006. How powerful is Kelloggs credit and collection policies? General rule - collection period should not greatly exceed the credit term...If you essential to get a plenteous essay, order it on our website: OrderCustomPaper.com

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