Financial Condition Of A Company And An Integral Part Of The Financial Statement

1113 Words Oct 19th, 2015 5 Pages
The balance sheet highlights the financial condition of a company and is an integral part of the financial statement. Through the analysis of the company 's balance sheet, it can reveal the company 's ability to pay short-term debt, the company’s operating stability, the size of the operational risk, and the company’s management overall.
The short term debt paying ability can be concluded after analyzing Bob Evans’ annual balance sheet and quarterly balance sheet. According to the 2015 April’s balance sheet (see Table 2), the total current assets are 124,195,000 dollar, but the total current liabilities are 153,092,000 dollar. Based on the ratio:
Quick Ratio = (Current Assets - Inventories)/Current Liabilities
The Bob Evans quick ratio is 0.65, which is lower than 1. That means Bob Evans cannot afford the short term liabilities. Bob Evans should try to negotiate with obligations to pay credit or borrow money from the bank to solve this dilemma.
Paying liabilities is an important criteria to measure the enterprise 's financial security and stability, and is important for the enterprise creditors, investors, operators and associated with enterprise 's aspects. We can calculate this ability by the debt asset ratio:
Debt asset ratio = total liabilities/total assets
The Bob Evans debt asset ratio is 0.63 which is reasonable for this industry. A lower liability dimension reflects a better performance by the company. Thus, investors will be confident with Bob Evans.
The operation…

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