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Berry's Bug Busters Analysis

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Submitted By amberulman0
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While conducting a Vertical and Horizontal analysis of our financial statements along with my ratio calculations I have found that our company Berry’s Bug Busters did not do as well in some areas as in the previous 2007 year but the company is still in a really good position. As well as Berry’s Bug Busters is not relying on debt financing as much as it once did. Among the three ratios conducted Liquidity, Profitability, and Solvency the users who would be most interested in these would be a short term creditor, a long term creditor, and stock holders. The short term creditor an example would be a bank is interested in the liquidity ratio “The liquidity of the borrower is extremely important in evaluating the safety of a loan” (Weygandt, Kimmel, & Kieso, 2010, p. 676). According to Weygandt, Kimmel, and Kieso (2010), While long term creditors and short term creditors both have interest in profitability ratios and solvency ratios either to see the companies ability to survive over a long period of time or to see the likelihood of growth in stocks and dividends (p 676).
Liquidity Ratios
The Liquidity ratios reveal that the company paid off its liabilities better in this past year than in 2007 our current ratio went up by 2.42 from 2007 when it was 3.57 to 2008 where it was 5.99. Along with the current ratio the acid test ratio also went up by 2.31 from 2007 where it was 3.01 to 2008 which came to 5.32. Although we see a growth through these set of numbers our companies had a decline with our Receivables turnover and our Inventory turnover by -3.71 with receivables and -6.7 with inventory. These ratios show us that the accounts relievable turn over decreased because the revenue was down and accounts receivables increased during the 2008 period. Berry’s Bug Busters generated more revenue in 2007 to match their accounts receivables whereas in 2008 this did

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