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Working Capital Change Paper

558 Words3 Pages

Working Capital increase by 25.2%. This change is favorable because positive working capital shows that the company has enough funds to meet its short-term liabilities.
Current Ratio increase by 34.8%. This change is favorable because a high current ratio is very beneficial for them to determine whether the company has a sufficient level of liquidity to pay liabilities.
Quick Ratio increase by 37.9%. This change is favorable because the company has the ability to pay their current debt liabilities without relying on the sale of inventory. A quick ratio of 10.7% means that a company has $10.70 of liquid assets available to cover each $1 of current liabilities.
Accounts Receivable Turnover decrease by -1.9%. This change is unfavorable because a decrease means the company is seeing more delinquent clients and their average collections is taking …show more content…

This change is favorable because numbers of days' sales in receivables shows the company has an increase in average turnover receivables and total revenue. The company also had a higher generation of sales.
Inventory Turnover didn't increase nor decrease. The company minimize their inventory because they needed to maintain it funding. A larger inventory is more costly.
Numbers of Days' Sales in Inventory didn't increase nor decrease. The company has no average inventory.
Ratio of Fixed Assets to Long-Term Liabilities decrease by -39.9%. This change is unfavorable. This decrease indicates the company have put themselves in twice as much as long-term debt.
Ratio of Liabilities to Stockholders' Equity decrease by -9.2%. This change is favorable because this is an improvement and indicates the company have an adequate margin of safety.
Number of Times Interest Charges Are Earned didn't increase nor decrease. The company's interest expense is $0.
Number of Times Preferred Dividends Are Earned didn't increase nor decrease. The company's preferred dividends is

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