FNT1 Task1

Western Governors University

FNT1 Task1 | Financial condition of Company G memo | | | Introduction: | Below is business memorandum to the CEO of Company G. Below is a chart that full meets the expectations of the task that was give. Each ratio is explained and the formulas used are listed along with the ratio finding. 1. That information is used to understand what our current trend and if it indicates a strength, weakness, no concern. Final Justification of identification of each ratio or trend as a strength, weakness, or no concern is given. 2. No outside sources where used to find the industry data quartiles because those numbers where already given on the attached “Statement Analysis Template Sheet” and we have assumed that the facts are current. | | |

Ratio and what it measure | formula for calculating | current ratio finding for year 12 | year 11 | the industry data quartiles | This ratio is Up or down from last Year | Indicated and Justification | Measures a company's ability to pay its current liabilities with its current assets. | Current Assets/Current Liabilities | | | | Decreasing | WeaknessThe reason why this is marked as Weakness is because it falls below the top industry quartile of 3.1 and the middle industry quartile of 2.1. The 1.77 is above the lowest quartile of 1.4 but since this time last year the companies current ratio was 1.86 this shows a decline and therefore based on all the information give must be listed as a weakness. | measure of how well a company can meet its short-term financial liabilities | Cash + Short Term Investments + Acct. Rec. Net/Current Liabilities | | | | Decreasing | WeaknessThis reason why this is marked as a weakness is because this ratio is very low meaning that if the company would have to pay all their liabilities immediately they would have a great deal of trouble