Lesson 11 At-Home Final Exam - Part 3.docx - The financial...

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The financial statements of a business can allow individuals to accurately analyze the financial standing of a business. They are useful to decision makers in a company, regulators, outside auditors and investors. While there are many important factors that determine the success of a business, and within financial statements numerous factors can be found, two that I will discuss in further detail are liquidity and efficiency. Liquidity is defined as a measure of how quickly an item can be converted to cash. (Nobles, Mattison, Matsumura. 2014) In relation to a business, liquidity is often described as the capacity a business has to meet its short-term obligations. Efficiency is defined as how productive a business is at using its assets, many times it is measured in relation to the amount of revenue generated from a given amount of assets. While these two factors are different, they do complement one another. In this paper, I will analyze the financial statements of Green Mountain Coffee Roasters, Inc., a publicly traded company, and specifically review the aspects of the financial statements that apply to the factors mentioned earlier. In order to measure short-term liquidity, one can use either working capital or the current ratio. Working capital is found by subtracting current liabilities from current assets, and is a dollar amount. The current ratio is found by dividing current assets by current liabilities. The current ratio is beneficial because it allows one to compare various companies with one another as well as the same company at different points

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