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Friday, December 13, 2013

Ford Motor Company, Microsoft and Exxon - working capital, current ratio, and quick (acid-test) ratio

I will use liquidity ratios ( workings(a) swell, authorized ratio, and industrious (acid-test) ratio) to realize how much gold is available for the Ford, Microsoft, and ExxonMobil companies to pay their electric catamenia debts? runniness is the go withs dexterity to convert noncash assets into cash or to encounter cash in order to escort current liabilities (Shim, Siegel, 1999, p.276). (Note: solely horse amounts are in the millions and are cited directly from the annual reports listed in the references) Working Capital is equal to current assets slight current liabilities. It is a safety cushion to creditors. A great quietus is required when the activity has difficulty borrowing on before long notice (Shim, Siegel, 1999, p.276). The Ford company had a working peachy of ( - $4,528 ) in 2002 ( $40,764 - $45,292 ) and ( -$11,434 ) in 2001. The plus in working ceiling is a favorable point; however, both years resulted in a negative working capital and spe lls nark for Ford. The Microsoft union had a working capital of $44,999 in 2003 ( $58,973 - $13,974 ) and $35,832 in 2002. The increase in working capital is a favorable sign and allows Microsoft to be in good shape. The Exxon Mobil company had a working capital of $5,116 in 2002 ( $38,291 - $33,175 ) and $5,567 in 2001.
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The descend in working capital and the low working capital could spell trouble for ExxonMobile. The current ratio is equal to current assets divided by current liabilities. It is used to measure the ability of an enterprise to meet its current liabilities out of current assets (Shim, Siegel, 1999, p.276). The limit of the ratio is th! at it may rise just prior to monetary distress because of a companys desire to improve its cash localization by, for example, selling fix assets. Such... If you want to get a honest essay, order it on our website: OrderCustomPaper.com

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