Finke - Kyle Finke BA 5351.3 October 1, 2009 1. Liquidity...

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Unformatted text preview: Kyle Finke BA 5351.3 October 1, 2009 1. Liquidity Majesco Entertainment The Current Ratio has steadily increased over the eight year period ending at 1.41 for the year ending October 2008. The increase in Account Receivable and Inventory balances were major contributors. Accounts Payable and other current liabilities also increased over the years, but not proportionately to current assets. The liquidity concern with Majesco Entertainment is reflected in its Quick and Cash Ratios. Both ratios are indicators of how truly liquid a company is and in the case of Majesco, both declined in 2008 from the previous year due to declining Cash & Short Term Investments. The decline in cash and substantial increases in Accounts Payable and Other Liabilities had the greatest negative impact. T HQ I nc. The liquidity position of THQ Inc. is very concerning. All the company’s liquidity ratios have steadily declined over the eight year period to a low Current Ration of 1.74 in 2008. Leading contributors to these results include a significant decline in Cash and Short Term Investments, current liabilities trending higher and maxing out in 2007. It appears that the significant decline in sales from 2007 to 2008 had a significant effect on Cash, Accounts Receivables, and Inventory, which declined to only turning 12.2 times in 2008. Asset Management Majesco Entertainment Days’ Inventory and Days’ Receivables for 2008 all increased from the previous year in 2007. Inventory turnover has decreased significantly 7.3 times in 2008 which indicates weaknesses in planning or obsolescence. With sales increasing by 25.3%, Inventory turns should have improved. The increase in Accounts Receivables in 2008 is reasonable due to Kyle Finke BA 5351.3 October 1, 2009 the increase in Sales but the increase in Days’ Receivables indicates that customers are paying slower and a potential credit issue could exist. The focus of Majesco would be to manage both Accounts Receivables and Inventory and maintain balances that would improve Cash balances....
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This note was uploaded on 11/03/2009 for the course FIN B.A. 5352 taught by Professor Dr.moon during the Spring '09 term at Texas State.

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Finke - Kyle Finke BA 5351.3 October 1, 2009 1. Liquidity...

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