P7 Unit 5 Business
- Submitted by: riannepeterkin
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- Category: Politics: Economics
- Date Submitted: 07/01/2016 11:59 AM
- Pages: 4
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Report on the Ratio analysis of Method Media:
The report explores the financial performance of Method Media and gives insights about the financial ratios conducted using the information from the balance sheet.
The current ratio is the classic measure of liquidity. It indicates whether the business can pay debts due within one year out of the current assets.
* Method Media’s Current ratio for the year 2010 was 79.38% or 0.79:1
* This means that they won’t be able to pay back because for every money they have they can only pay 79.38% of it. E.g. for every £1 they have they can only method media 79p from the £1 of currents assets. This means that the firm will not be able to pay it current liability from the proceeds if its currents assets. This means that method media may have use loans or retain profits they pay short term debts. Although the ratio will go lower, meaning that won’t have as such as current assets for every single £1.
* Method Media’s Current ratio for the year 2009 was 81.21% and so the 2010 figure represents a decrease of 1.83% point this means more debts. This is not a promising profits.
Acid Test Ratio: Not all assets can be turned into cash quickly or easily, so the acid test ratio is a sterner test of the firm’s abilities to pay debts due within one year from assets that it expects to turn into cash within that year.
* Method Media’s Acid test ratio for the year 2010 was 58.96% or 0.59: 1
* This this means for every £1 of short term debts the business have 59p of current assets. The business is likely to struggle to pay of its currents liability of its current assets. This means that they may have to use loans or retained profits to pay for the debts they own. As we can’t creditors (people we own money) with stock the assets of the ratio can be seen as an accurate reflection of our liability to pay back short term debts.
* Method Media’s Acid test ratio for the year 2009 was 60.82% and so the 2010 figure...
The report explores the financial performance of Method Media and gives insights about the financial ratios conducted using the information from the balance sheet.
The current ratio is the classic measure of liquidity. It indicates whether the business can pay debts due within one year out of the current assets.
* Method Media’s Current ratio for the year 2010 was 79.38% or 0.79:1
* This means that they won’t be able to pay back because for every money they have they can only pay 79.38% of it. E.g. for every £1 they have they can only method media 79p from the £1 of currents assets. This means that the firm will not be able to pay it current liability from the proceeds if its currents assets. This means that method media may have use loans or retain profits they pay short term debts. Although the ratio will go lower, meaning that won’t have as such as current assets for every single £1.
* Method Media’s Current ratio for the year 2009 was 81.21% and so the 2010 figure represents a decrease of 1.83% point this means more debts. This is not a promising profits.
Acid Test Ratio: Not all assets can be turned into cash quickly or easily, so the acid test ratio is a sterner test of the firm’s abilities to pay debts due within one year from assets that it expects to turn into cash within that year.
* Method Media’s Acid test ratio for the year 2010 was 58.96% or 0.59: 1
* This this means for every £1 of short term debts the business have 59p of current assets. The business is likely to struggle to pay of its currents liability of its current assets. This means that they may have to use loans or retained profits to pay for the debts they own. As we can’t creditors (people we own money) with stock the assets of the ratio can be seen as an accurate reflection of our liability to pay back short term debts.
* Method Media’s Acid test ratio for the year 2009 was 60.82% and so the 2010 figure...