# Ratio Analysis Of Myer

1177 Words 5 Pages
PART A
Analysis of the Current ratio
What is current ratio?
The current ratio measures the liquidity of a business: liquidity is the short term solvency of a business or the ability of a business to pay off their short term debts. In order for Myer to a have positive financial ratio the company must ensure that their business had close to doubled the amount of assets to cover its liabilities. Myer must focus on how quickly their assets can be turning into cash as well as their ability to cover their current liabilities whilst using their short term cash.
Myer has had a slight increase from 2013 to 2014 in both their current assets and their current liabilities; this is shown by looking at their annual report for 2014 and comparing it to their
Analysis of the Debt to Equity ratio
What is debt to equity?
Debt/Equity Ratio is a debt ratio used to measure a company 's financial leverage, calculated by dividing a company 's total liabilities by its stockholders ' equity. The debt to equity ratio demonstrates how much debt a company is using to finance its asset comparative to the amount of value represented in shareholders’ equity. for Myer to have a positive ratio they must be able to own more and owe less money, and have a lower ratio to prove how solvent the business is.
Myer has had a slight decrease in owners’ equity over the course of two years, equalling to \$192,231, Myer owners’ equity has decreased by \$192,231 between 2013/2014 financial years. This has a negative impact on the company as they have increased their debt and reduced the amount of assets they own.
Although this decrease in owners’ equity total liabilities have risen. Unfortunately for Myers both 2013 ratio (1.1:1) and 2014 ratio (1:2:1) have not noticeably changed much.
Strategies
Strategies for Myer to help them improve their future Debt to Equity ratios
Having unnecessary amounts of inventory that have no costumer demand can be both a waste cash flow and time.
 Myer can reduce debt by increasing sales revenues and profitability. This can be archived by raising prices, increasing sales or reducing costs. By doing this the cash generated can then be used to pay off debt that the company

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