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Liquidity Ratios: Measure A Firm's Ability To Meet Its Current Obligations

The document analyzes various financial ratios for Bellway Plc. in 2009 and 2008. It calculates liquidity ratios such as working capital, acid ratio, current ratio, and cash ratio to measure the company's ability to meet current obligations. Profitability ratios like net profit margin are also included to measure the ability to control expenses and earn a return. Working capital and current ratios decreased from 2008 to 2009, while net profit margin turned negative, suggesting worsening liquidity and profitability over that period.

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115 views3 pages

Liquidity Ratios: Measure A Firm's Ability To Meet Its Current Obligations

The document analyzes various financial ratios for Bellway Plc. in 2009 and 2008. It calculates liquidity ratios such as working capital, acid ratio, current ratio, and cash ratio to measure the company's ability to meet current obligations. Profitability ratios like net profit margin are also included to measure the ability to control expenses and earn a return. Working capital and current ratios decreased from 2008 to 2009, while net profit margin turned negative, suggesting worsening liquidity and profitability over that period.

Uploaded by

pads_irl
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Financial Information Analysis

Analysis of Bellway Plc.

2009 2008

Liquidity Ratios: Measure a firm's ability to meet its current obligations.

Working Capital: Serves as the liquid reserve available to satisfy contingencies and uncertaintie
Formula: Current Assets - Current Liabitities

1306157/246147 1667745/336901
€1,060,010 €1,330,844

Acid Ratio: A measurement of the liquidity position of the business


Formula: (Assets-Inventory)/Current Liabilities

(1306157-1211351)/246147
(1667745-1503936)/336901
0.39 0.49

Current Ratio: Provides an indication of the liquidity of the business by comparing the amoun
Formula: Current Assets/Current Liabilities

1306157/246147 1667745/336901
5.31 4.95

mpany has pledged


Cash Ratio:
its receivables and its inventory, or the analyst suspects severe liquidity problems with i
Formula: Cash and Cash Equivalents/Current Liabilities

43210/246147 109313/336901
0.18 0.32

Measure management's ability to control expenses and to earn


Profitability Ratios:

Net Profit Margin:A measure of net income dollars generated by each dollar of sales
Formula: Net Income/Net Sales

(-)27444/683813 27003/1149541
-0.04 0.02
is

References:
http://www.crfonline.org/orc/cro/cro-16.h

encies and uncertainties

comparing the amount of current assets to current liabilities.

quidity problems with inventory and receivables.

enses and to earn a return on the resources committed to the business.


ine.org/orc/cro/cro-16.html

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