Toys R Us and Subsidiaries Essay
Ernst & Young, LLP, independent auditors for Toys "R" Us Inc. and Subsidiaries issued an unqualified opinion on the company’s financial statements as of February 1, 1997 and on the consolidated results of operations and cash flows for the three years ending February 1, 1997, February 3, 1996 and January 28, 1995. The report by the independent auditors and their issuance of an unqualified opinion serves to provide reasonable assurance to stockholders, management, regulatory agencies and the public, that the financial statements are materially correct. …show more content…
The company’s short term liquidity of 1.24 in 1997 does not make it a desirable credit risk. "Many bankers and other short-term creditors traditionally have believed that a retailer should have a current ratio of at least 2 to 1 to qualify as a good credit risk." (Meigs, 1999) The company is equal to the industry standard however. Short term liquidity as measured by the quick ratio which excludes inventory and other short term assets (assumed to be prepaids etc.) is also low at .3, however this is higher than industry standard. It is likely the heavy investment in inventory that drives these ratios to be so low.
Ten Year Trend for Current