Assessment 1---accounting for decision making - Essay Example

This indicates that the assets used by the company to generate profits increased relatively more than the income generated from those assets. As a result, ROA of the company declined from 2008 to 2010. d) Yes, the company should worry about the decreasing trend in its quick ratio. This indicates that the company does not have ample liquid assets to repay its short term obligations. The creditors would become reluctant to sell goods on credit if the company does not improve its quick ratio. f) The company has a low sale turnover ratio which indicates that the assets are not being fully utilized to generate revenue and there is too much investment in unproductive assets.

Furthermore, the company has a very low debt to assets ratio which indicates that the company is not utilizing the opportunity to use debt as a means of growing its business. Company should dispose of the unproductive assets and use the cashflow generated for paying of its short term debts and improve its liquidity. Moreover, the company should make use of long term debt for the growth of the