Financial Statement Analysis Case Study Example | Topics and Well Written Essays - 500 words

Financial argumentation Analysis - Case Study ExampleThis shows that the short- frontier financial position of Advance Auto part and Pep Boys is slightly better than that of AutoZone. While a low current ratio shows that the short term financial position is endangered, a very high current ratio would indicate idleness of workings capital. It would mean that cash is not being utilized in an optimal way. For example, the excess cash efficacy be better invested in equipment.A current ratio can be improved by increasing current assets or by decreasing current liabilities. Acquiring a long-term loanword instead of short-term debt, selling an idle or less useful fixed asset atomic number 18 some of the many ways of improving the current ratio.The immobile ratio (also called acid test ratio) indicates the liquidity of a personal credit line. The quick ratio looks only at a companys most liquid assets and compares them to current liabilities. It tests whether a business can meet its o bligations even if adverse conditions occur. In general, quick ratios between 0.5 and 1 are considered hunky-dory as long as the collection of receivables is not expected to slow. AutoZone has a very low quick ratio of 0.173 times.