# FINANCIAL STATEMENT ANALYSIS10 LIQUIDITY RATIOSLiquidity ratios measure the extent to which a

FINANCIAL STATEMENT ANALYSIS1.0 LIQUIDITY RATIOSLiquidity ratios measure the extent to which a firm has adequate cash flows or liquid assets. 1.1 Current Ratio Current ratios is one seeks to look at the firm’s assets that are relatively liquid in nature and match them to the short-term liabilities of the firm. Current assetsCurrent ratio = Current liabilities Years 2016 (RM’000) 2017 (RM’000)Current ratio = 1 ,336 ,738690 ,909= 1.93 times = 1 ,251 ,356795 ,738= 1.57 times1.2 Quick RatioQuick ratios or acid test ratio measures the ratio of current assets less stock to current liabilities. Current assets – inventoryQuick ratio = Current liabilitiesYears 2016 (RM’000) 2017 (RM’000)Quick ratio = 1 ,336 ,738 – 263 ,679690 ,909= 1.

55 times = 1 ,251 ,356 – 315 ,775795 ,738= 1.18 times2.0 ASSET MANAGEMENTThis section shows four elements of asset management which is inventory turnover, days sales outstanding (DSO), fixed assets turnover and total asset turnover.2.1 Inventory Turnover RatioInventory turnover ratio or stock turnover ratio indicates the relative liquidity of stocks in a firm, as measured by the number of times a firm’s stock are sold that replaced during the year. It can be taken as a measure of a firm’s efficiency in turning its inventory into sales.

Get quality help now
WriterBelle
Verified writer

Proficient in: Financial Statement

4.7 (657)

“ Really polite, and a great writer! Task done as described and better, responded to all my questions promptly too! ”

+84 relevant experts are online

Sales Inventory turnover ratio = Inventories Years 2016 (RM’000) 2017 (RM’000)Inventory turnover ratio = 2 ,888 ,515263 ,679= 10.95 times = 3 ,409 ,176315 ,775= 10.80 times2.2 Days Sales Outstanding (DOS)The days sales outstanding (DOS) is known as the average collection period or days’ sales in receivables, it also measures the number of days that a company needs to collect cash from its credit sales. This calculation shows the liquidity and efficiency of the collection department of the company. Receivables Days sales outstanding = Average sales per day Years 2016 (RM’000) 2017 (RM’000)Days sales outstanding = 326 ,4827 ,913.74= 41.26 days = 393 ,4339 ,340.

Get to Know The Price Estimate For Your Paper
Topic
Number of pages
Email Invalid email