Current Ratio and Quick Ratio
Using the same company and annual reports that you chose for your Week 1 – Discussion Forum, Reading and Using the Annual Report Case Study,- Calculate the current ratio and quick ratio for the latest two years, obtain the industry average ratios from the IBISWorld database, available through the UAGC Library, or another outside resource of your choice, and analyze the results.
- The IBISWorld database is accessible through the University of Arizona Global Campus Library. This database contains industry reports and market research on more than 1,300 United States industries. The reports provide key data, financial ratios, and benchmarks, plus industry forecasts. IBISWorld’s Data Wizard tool allows comparisons between a chosen company and industry best practices. If needed, review the Industry Wizard – Industry Product (Links to an external site.) tutorial on how to use this database.
- Discuss what each of these ratios tells you about the company’s current financial condition, and how they compare to the industry averages.
- Identify the major causes of any changes in these ratios and discuss your assessment of the company based on these changes.
- Review the balance sheet and the notes to the most recent financial statements, and identify any contingent liabilities.
- Discuss whether or not you agree with how the company chose to treat each contingency on the financial statements (i.e., recorded vs. disclosed, but not recorded).
- Discuss the effect on the financial statements of the company’s treatment of the contingency.
- Discuss whether the contingent liabilities change your assessment of the company.
Current Ratio and Quick Ratio