Accounting Fundamentals

Ratio Analysis of United Parcel Service

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8th July , 2009

Ratio Analysis

Introduction

Ratio analysis is the most popular and effective method of financial statement analysis . It involves the computation of various ratios using data from financial statements and interpretation of the calculated ratios for taking rational decisions . The present analyses the key financial features of United Parcel Service (UPS ) of the United States of America using the latest financial statements . The covers only

important ratios incorporating the short term as well as long term financial soundness

Current Ratio

Current ratio is used to ascertain the liquidity of the firm . It is used to analyze the trends and to compare the short term financial matters of the firm . It is also used to predict the bankruptcy of the firm . It provides information about firm 's ability to meet the short term obligation and used by investors to extend short term credit to the firm . Shareholders prefer lower current ratio because it reduces the working capital of the firm . It can be mathematically expressed as 1 .13

The ratio indicates that the current assets are higher than the current liabilities . The figure reveals that the firm is in good in its operations and has a good shorter financial position . But , it is found that there has been a decreasing tendency showed by current ratios for the past few years

Debt - equity Ratio

It measures the relationship...