Creditors Turnover Ratio - Literature review Example

Current ratio = Current Assets / Current Liabilities (2011) = 5,385,000,000 / 2,907,000,000 =1.... Quick / Acid Test ratio = (Current Assets – Inventory) / Current Liabilities (2011) = (5,385,000,000 – 112,000,000)/ 2,907,000,000 =1.... Current ratio = Current Assets / Current Liabilities (2011) = 3,032,000,000 / 2,001,000,000 =1.... Quick / Acid Test ratio = (Current Assets – Inventory) / Current Liabilities (2011) = (3,032,000,000 –77,000,000) / 2,001,000,000 =1....

Title: Financing the Short Term Obligations of the Business Name: Group: Date: Introduction The purpose of this report is of twofold: to highlight and understand four short term finance sources available to business in order to fulfil its short term business commitment; to practically apply the use of liquidity ratios and the efficiency ratios to comprehend how businesses use these sources in order to meet their day-to-day operations requirements....

Finance and Accounting Project Research Contents Contents 2 Executive Summary 4 Introduction 5 Ratio Analysis 5 Profitability Ratio 6 Return On equity 6 Gross Profit Margin 7 Net Profit Margin 7 Liquidity Ratio 8 Current Ratio 9 Quick Ratio 9 Asset Management Ratio 10 Debtors Turnover Ratio 11 Creditors Turnover Ratio 11 Total Asset Turnover Ratio 11 Net Working Capital Turnover Ratio 12 Debt Management Ratio 12 Debt Ratio 13 Debt equity ratio 13 Equity multiplier 13 Conclusion 14 Works Cited 15 Appendices 16 Executive Summary Emirates Insurance Company was established in the year 1982 in Abu Dhabi, UAE....

In order to accomplish this task, this report will utilize financial ratio analysis. Financial ratio analysis has become one of the most popular techniques utilized in order to ascertain the health and well being of a business organization.... Financial ratio analysis enables decision makers to uncover trends in business performance and compare different business organizations (Keown, et.... In terms of liquidity, the current ratio and the acid-test ratio will be utilized....

Days inventory ratio of Prolong Ltd indicate that it took 79 days on average to sell the goods in inventory in 2009 and 93 days in 2010.... Days debtor ratio indicates... Asset turnover indicates the sales that are generated from $1 investments in assets.... Prolong's Ltd asset turnover remained relatively stable in 2009 and 2010.... Prolong Ltd does not have ample cash to repay its creditors and due to this amount owed to the creditors have increased....

Gearing ratio= (Long term debt short term debt+ bank overdrafts / shareholders equity).... A high gearing ratio means the company is mainly financed through debt capital.... However, low gearing ratio indicates that a company is financed mostly by share capital.... A high ratio is indicative of good performance whereas lower rate shows the business is performing poorly.... The ratio of 0.... This ratio captures gives the figure of how much a company makes or loses from its sales....

Gross profit margin ratio is the 'percentage of sales left after subtracting the cost of goods sold from sales.... The paper "Public and Private Finance of Liberty International Plc " states that the companies are suffering from liquidity crunch so severely that short term solvency is at stake....

This ratio helps us to understand where the company is undervalued or overvalued.... At present, the ratio is less than one so the share is undervalued; it can be said with the passage of time, the market value of the share will increase and the investor will be benefited.... Higher the value to this ratio, more profitable is the company's operations (Abrams & Kleiner, 2003, p.... 31)The ratio indicates with the passage of time the company's gross profit margin is declining....