HVAC Financial Analysis.docx - Morgan Roane MGMT 490...

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Morgan Roane MGMT 490 Professor Richardson HVAC Financial Analysis A financial analysis is defined as an inspection of a company from a variety of perspectives to understand a company’s financial situation and to determine how to strengthen the company. For this analysis, HVAC Co.’s liquidity is being measured by using the Current ratio, which is found by dividing current assets and current liabilities, Quick ratio, found by adding cash to account receivables then dividing by current liabilities, Sales/Receivables ratio, which is total sales divided by accounts receivables, and Days Sales Outstanding ratio, which is 365 divided by the Sales/Receivables ratio. The purpose of the Current ratio is to measure how quickly a company can pay off its short-term and long-term obligations. In 1992 and 1994, the Current ratio was 1.5, which was above industry average. In 1993, the Current ratio was 1.4, which was equal to the industry average. The purpose of the Quick ratio is to measure a company’s ability to pay its current
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