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Summary of Martin Manufacturing Company
Summary of Martin Manufacturing Company
Financial Position
Liquidity:
As for the liquidity Martin Manufacturing, we can calculate a current ratio of 2.5, and a Quick ratio of 1.3. Analysis of these ratios tells the company’s ability to meet its short term obligations. The current ratio can be interpreted as showing that for every $1 in liabilities; the company has $2.50 to meet those obligations. A 1 to 1 ratio would be perfect however in a manufacturing industry operations are difficult to predict, thus $2.50 is a very safe calculation. However the industry average is 1.5 and may show 2.5 as being the symptom of wasted capital that can earn more if allocated properly.
The Quick ratio is the same as the current ratio, however it doesn’t include inventory. By taking Martin Manufacturing’s inventory figure out of the equation we can see that inventory may be the m
Approximate Word count = 597
Approximate Pages = 2 (250 words per page double spaced)
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