Calculate The Financial Ratios Interpret

Financial AnalysisThe financial statement analysis has been done to know the performance of the company; this has been taken into consideration by a strong focus on ratio analysis, vertical analysis, horizontal analysis and Duo-pont analysis.Liquidity AnalysisLiquidity ratios are used to measure firm’s short term obligations. It helps in comparing short term obligations with short term resources available to meet these obligations. Liquidity ratios show the relationship of a firm’s cash and other current assets to its current liabilities.1. Current RatioCurrent ratio: This ratio indicates the extent to which current liabilities are covered by those assets expected to be converted to cash in the near future.Current assets include cash, marketable securities, accounts receivables, inventories and short term investments. Current liabilities include accounts payable, short-term notes payable, current maturities of long-term debt, accrued taxes, and other accrued expenses. Current Ratio=Current Assets/Current Liabilities Current ratio of a company should be at least 2 times, i.e. current assets should be twice as current liabilities of any firm. Considering, the current ratio we can say that the current ratio of the company has decreased in 2010 as compared to 2009, which states that the short term obligation of the company has decreased. Higher