Financial Case Analysis - Ratio Analysis

The financial ratios used in this problem show that Bethesda mine has some work ahead of them. There is substantial way of life for improvement for some of the ratios involved. A more thorough synopsis would require ratio information from the mining industry as a whole but a small centering is provided below.

The authentic ratio is low. Bethesda Minings current ratios over the two old age given indicate negative net working capital. short bullion to cover daily expenses is not an attractive site in any industry. One factor in particular proposition that is decreasing the current ratio is accounts payable. This item is rather senior tall and is affecting the companys short-term liquidity. On a bright note, the current ratio improved 22.3% year-to-year so focus appears to be in the correct place.

Removing inventory levels from the equation yields the quick ratio, which is significantly slight than the current ratio for Bethesda Mining. This decrease indicates that part of the problem may be tied into excessive inventory levels. This, coupled with the high accounts payable values, is damaging the current ratio. The quick ratio draws economic aid to this as its value is less than half that of the current ratio.

The property ratio is a very straightforward calculation. In Bethesda Minings case, it is clearly saying there is not enough cash sexual relation to current liabilities.



Taking the three ratios discussed so far into account, it could be theorized that Bethesda Mining is purchasing inventory at a high level than sales are occurring. The accounts payable accounts (though decreasing in 2003) are still too high when compared to the available cash on hand.

The debt-equity, equity multiplier, and total debt ratios all lead to correspondent conclusions. Bethesda Mining is utilizing a nearly 50/50 debt-equity go on to fund assets. 2003 figures show that the firm is...

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