ipl-logo

Hollywood Manufacturing Company Current Ratio

520 Words3 Pages

In 2014, the Current Ratio is decreasing from 1.66 to 1.5. This shows the company cannot easily make current debt payment.
The current ratio helps investors and creditors appreciate the liquidity of a company and how simply that company will be able to pay off its current liabilities. This ratio expresses a firm's current debt in terms of current assets. If a company has to vend of fixed assets to pay for its current liabilities, this generally means the company isn't generating sufficient from operations to carry all activities. Further we can say the company is trailing money. At times this is an outcome of low collections of accounts receivable. The current ratio also throws light on the overall debt load of the company. If a company is subjective down with a current debt, its cash flow will suffer.

The Inventory turnover is .6 in both the years that implies that it would approximately take 6 years to sell the entire …show more content…

The first component is stock purchasing. If more amounts of inventory are purchased during one year, the company will have to sell more amounts of inventory to get better its turnover. If the company can't sell these amounts of inventory, it will earn storage costs and other investment costs. This shows the company does not spend more by buying too much inventory and wastes resources by storing non-salable inventory. It also shows that the company can efficiently sell the inventory it buys. This measurement also shows investors how liquid a company's inventory is. Think about it. Inventory is one of the biggest assets a retailer reports on its balance sheet. If this inventory can't be sold, it is worthless to the company. This measurement shows how easily a company can turn its inventory into cash. Creditors are mainly interested in this because inventory is often put up as guarantee for loans. Banks want to know that this inventory will be effortless to

Show More
Related
1064 Words | 5 Pages

Thus, they are in a position to cover any debt obligations that may come up quickly. Their inventory turnover has been relatively steady over the five years of data. In year 7 their inventory turnover reached 3.2 which means inventory is moving through to customers at an increased rate over the year which correlates with their increased sales. This statement is supported by the fact that the days inventory held for stoves has dropped over the past five years from 146 days in year 3 to 114 days in year 7. These reductions have allowed for the reduction of their days in accounts payable from 51 all the way down to 11.

Read More
1077 Words | 5 Pages

The current ratio (working-capital ratio) is used to measure liquidity and it is the present assets of a company to the present liabilities (Law, 2016). A current ratio of 1 (100%) or greater is an indication that the company have a high chance

Read More
688 Words | 3 Pages

Sally’s Beauty Holding, Inc., who has a current ratio of 2.4, is quicker to turn their current asset into cash but also is not investing excess assets. Both companies are able to meet their debt obligations. On the other hand, Coty’s Inc. current liabilities exceeds their current assets revealing their current ratio to be .94. Having a ratio below one can imply that current assets are barely being covered by the current liabilities. Ulta Beauty’s debt-to-equity is estimated to be .65, which reveals Ulta Beauty to have a low risk and not using high amounts of debt to finance operations, because total liabilities is $1,001,660 and total shareholders’ equity is $1,550,218.

Read More
1060 Words | 5 Pages

I nventory Value + Purchases – Current Inventory Value = Costs of Goods Sold Cost of Goods Sold / Actual Net Sales = Food Cost percentage Jeremy states that the improvements to the inventory system over the last few years have helped him run his business better.

Read More
506 Words | 3 Pages

The current ratio is the best way to assess the ability of a company’s capabilities to pay off its short term liabilities with short term assets.

Read More
990 Words | 4 Pages

The debt to ratio is a ratio that compares a firms total liabilities and shareholders’ equity. It shows the proportion of the amount of money invested by the business owners as well as external entities. Debt to Equity Ratio = Total Liabilities/Shareholders’ Equity = $80,994/$931,490

Read More
438 Words | 2 Pages

The calculation on inventory turnover shows that Pamplin Inc. is moving its inventory more slowly than the industry. This suggests that Pamplin Inc.’s inventory is less liquid than its competitors. The days in receivable ratio demonstrates that Pamplin Inc. is significantly slower at collecting its

Read More
615 Words | 3 Pages

2.CVS Inventory Loss reserves: 189 Million 2015 2014 2013 2012 2011 Cost of Goods Sold 126,762.00 114,000.00 102,978.00 100,627.00 86,539.00 Inventories 14,001.00 11,930.00 11,045.00 10,759.00 10,046.00 Inventory Turnover(Days): 9 9.5 9.3 9.3 8.6 Walgreen: 9 7.5 7.2 6.4 6.5 Industry: 9.52 9.55 9.62 8.9 Day in Inventory: 40 37.9 39.24 39.24 42

Read More
1196 Words | 5 Pages

One of the major changes anticipated is the requirement that would see public companies and organizations break out the reporting of their operating segments to in particular cases disclose the inventory balances of each of these segments, for example, an operating segment that would be containing in the financial or manufacturing units of a corporation. In addition, such organizations would have to disclose the segments’ inventory components for example, how much of it consists of raw materials, work-in-process, finished goods, and supplies. In fact, private companies and public ones that do not participate in segment reporting would also have to provide component breakdowns. Component disclosures would supply investors with crucial information about a company’s revenue and cash-flow prospects (Charles Mulford, 2016).

Read More
754 Words | 4 Pages

The auditor’s primary objectives when he or she deserves the client’s annual physical inventory are existence, rights, accuracy, realizable value, completeness, classification, and cutoff. There are key audit procedures that an auditor would typically perform during and after the client’s physical inventory. One procedure would be to observe the client’s inventory-taking procedures. These inventory-taking procedures are either periodic inventory system or perpetual inventory system. If the company is using a periodic inventory system, the physical count determines the balance in the inventory account.

Read More
1247 Words | 5 Pages

It is the same as the current ratio but excludes inventory which is generally the least liquid current asset. The quick ratio for 2016, 2105, 2014, 2013 are as followed: .81, .75, .85, .93. This shows that Disney will not be able to satisfy short term obligations without having to sell inventory. Selling inventory can be problematic because many types of inventory cannot be sold for the following reasons: being partially completed, inventory is typically sold on credit, and when the company needs cash its generally when business is bad and selling inventory is more difficult. (Gitman, 2017)

Read More
583 Words | 3 Pages

Keeping an accurate and plentiful inventory will prevent a medical office from running out of needed supplies. If there is an emergency and the clinic has an influx of patients and they aren’t properly stocked, they could run into issues of running out of important supplies needed to help with the emergent patients. The goal of having an accurate inventory is to yield an anticipated result with the least effort, expense, and waste. When ordering supplies, it is imperative that there are enough supplies ordered to last until the next shipment, but also important to not overstock the supply room. This will help minimize loss, theft, and damage.

Read More
983 Words | 4 Pages

This would be linked to the inventory management system and provides consolidated data. Team members would therefore spend less time counting and recording stock manually whilst management will be able access this data from any location. This would reduce travel cost and time away from base. Lastly, it assists in processing transactions based on prerequisites entered into the system.

Read More
2240 Words | 9 Pages

The current ratio is a liquidity and efficiency ratio that measures a firm's ability to pay off its short-term liabilities with its current assets. In the year 2012, KHB had a current ratio of 1.688 but it comes to decrease in 2013 to a 1.642. The ratio in the year 2014 was 1.670 indicating a slight increase. The competitor of KHB, the PMMB had a current ratio of 4.785, 4.012 and 3.622 from the year 2012 to 2014 respectively. A current ratio should be more than 2.0 as a higher current ratio indicates a more promising current debt payments.

Read More
1862 Words | 8 Pages

The financial manager, he needs in inventory management, should as far as possible the excessive inventory and inadequate investment. The importance and significance of inventory management can be specified as

Read More

More about Hollywood Manufacturing Company Current Ratio

Related Topics

Open Document