NAME: KEEFE P. MENTINO ACCT 102 GR. 12-ABM
ACTIVITY #1: ACCT 2: MODULE 1 – WEEK 1
A. ANALYZE THE COMPANY’S LIQUIDITY POSITION
Given the 3-year comparative analysis of CARE COMPANY’s current ratio and quick ratio:
2001
2002
2003
CURRENT RATIO
2.55
3.6.8
4.13
QUICK RATIO
0.96
0.77
0.51
1. What does this analysis tell you about the overall liquidity of Care Company over the 3-year
period?
The above analysis of Care Company for a 3-year period showed the company’s liquidity
in terms of current and quick ratio. It showed that the current ratio gradually increased over 3 years
while the quick ratio consistently decreased over the same period. The current ratio of the company
is favorable as it shows the company can easily make current debt payments. It just also needs to
be monitored as if it becomes too high, it may indicate that the company is not efficiently using its
current assets or its short-term financing facilities. The quick ratio on the other hand, is lower than
the general average. It may indicate that the company can’t currently pay back its current liabilities
and it’s a bad sign for investors and partners. Overall, the company’s liquidity ratios indicates that
2002
