Using Ratios to Evaluate Performance
The following balance sheet data are given:
|
2000 |
1999 |
|
|
Cash |
$ 45,000 |
$ 35,000 |
|
Fixed assets |
330,000 |
270,000 |
|
Current liabilities |
95,000 |
45,000 |
|
Long term liabilities |
300,000 |
320,000 |
|
Accounts receivable |
115,000 |
95,000 |
|
Invested capital |
100,000 |
100,000 |
|
Inventories |
100,000 |
80,000 |
|
Retained earnings |
95,000 |
15,000 |
Required
a. Prepare a balance sheet for each year.
b. Compute the liquidity ratios described in this chapter, along with the asset management and debt management ratios. Evaluate the company’s liquidity. Evaluate its asset management and debt management.
c. What strategies does the company seem to be following in managing its finances?