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An analysis of the firm’s ratio generally is the first step in a financial analysis. The ratios are designed to show relationships between financial statement accounts within firms and between firms. Translating accounting numbers into relative values, or ratios, allows us to compare the financial position of one firm to another, even if their sizes are significantly different (TBC). In order to determine current financial health of the Tire City, Inc. we have to look at its financial statement and convert this information into a different numbers of ratios such as: Liquidity ratios, Asset management ratios, Debt Management ratios and Profitability ratios that will give us analytical financial health information about the company.
Liquidity is about how easy you can sell goods or convert this goods or other valuables into the cash without significant loss of its original value in order to meet current financial liabilities. An analysis of the company’s liquidity is analysis of opportunities for the company to cover all its financial liabilities. Company’s assets are reflected in the balance sheet and have a different liquidity:
-cash in bank accounts
-bank bills, government securities;
-current accounts receivables, loans, corporate securities
-stocks of goods and materials in warehouses;
-cars and equipment;
-buildings and constructions;
Liquidity ratios - financial indicators that are calculated on the basis of the company’s balance sheet to determine the company's ability to repay current debt at the expense of available current assets. The meaning of these figures is to compare the value of current debts and working capital, which should ensure repayment of these debts. Current ratio - financial factor that shows ratio of current assets to current

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