You are on page 1of 1

Current Ratio:

A common but often misleading rule of thumb is that a 2:1 ratio means a company is "in good
shape." A high current ratio indicates that a company is able to meet its short-term obligations.
The current ratio for the company over the years has not been in the ratio of 2:1 even though it
did increase in 2009 and stayed constant in 2010 at a mark of 1.28. It is not advisable for
investors to invest in this company as a low current ratio could suggest problems with inventory
management, ineffective or lax standards for collecting receivables, or an excessive cash burn
rate.
Quick Ratio:
The quick ratio of the company first increased in 2009 to 0.86 from 0.81 and stayed stable in
2010, but then later there was a constant decrease in 2011 to 0.84 and 0.82 in 2012. But in all
the years, the quick ratio of the company is less than 1.0. A common rule of thumb is that
companies with a quick ratio of greater than 1.0 are sufficiently able to meet their short-term
liabilities. In general, low or decreasing quick ratios generally suggest that a company is over-
leveraged, struggling to maintain or grow sales, paying bills too quickly or
collecting receivables too slowly. The company is consistently having a quick ratio of less than
one over the years, thus it is not advisable for an investor to invest in this company because the
lower the ratio, the less financially secure the company is in the short term.
Earnings per Share:

You might also like