Imagine you and your Learning Team are starting your own business.
Write a 130 words on the bullet below after determining which ratios your team will use for analysis and evaluation of your business.
Explain each ratio thoroughly.
Describe the method for forecasting future sales.
Format your paper consistent with APA guidelines.
- 1. Current liquidity ratios. The primary purpose of liquidity ratios is to identify the relationship between current assets and current liabilities; thus, liquidity ratios provide the basis for an evaluation of the ability of a company to meet its current obligations. Liquidity ratios that provide a direct analysis of current and quick assets in relation to current liabilities are the current ratio(or the working capital ratio) and the quick ratio (or acid test ratio). The analysis of credit sales revenue provides an analysis of the average time that elapses between the creation and collection of current receivables. Typical ratios concerning receivables are the credit card receivables turnover; credit card receivables as a percentage of net credit sales; credit cards average collection period; accounts receivable turnover; accounts receivable as a percentage of net credit sales; and accounts receivable average collection period.