Analyzing Financial Statements

Part I

Current ratio

Current Ratio

2002 (A ) 2003 (A ) 2004 (A

0 .75 0 .87 0 .90 Long Term Solvency Ratio

Long Term Solvency Ratio

2002 (A ) 2003 (A ) 2004 (A

1 .26 1 .38 2 .06 Contribution ratio

Contribution Ratio

2002 (A ) 2003 (A ) 2004 (A

0 .53 0 .51 0 .49 Management /expense ratio

Management Expense Ratio

2002 (A ) 2003 (A ) 2004 (A

0 .30 0 .28 0 .23 Revenue /expense ratio

Revenue Expense Ratio

2002 (A ) 2003

(A ) 2004 (A

0 .98 0 .94 1 .11 Part II

Analysis

Current ratio

The current ratio of a firm is crucial to analyze the liquidity position of a company . It measures how much assets does a firm owns to repay its current liabilities in case of for a firm since a greater value of current ratio depicts strong financial position of a company and makes it favorable investment firm for investors . The current ratio calculated for the firm indicates increasing strengthening asset position of the company with increasing current ratio

Long Term Solvency Ratio

The long term solvency ratio is a risk ratio that measures a firm 's ability to repay its long term liabilities . This ratio is important since the firms with long term loans like leases and mortgages are required to keep paying interest and principle for a long time and thus requires to incorporate the cash flow generations and predicted cash flows for firm . A firm needs to calculate...