Quick ratio tells us the liquidity of the company and

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Quick Ratio tells us the liquidity of the company. And in 2014 the company had 0.74 to overcome the liabilities of $1. And now, the company has $0.72 of liquid assets available to cover $1 of current liabilities. That’s why, it is not a good sign for the company. Because, it’s liabilities will not be overcome by these liquid assets. And it has even decreased in the liquid assets in 2017 i.e. 0.72 than that of 2014 that was 0.74. So, the company should increase its total liquid assets. Protor & Gamble should improve Inventory turnover ratio Dispose unproductive assets Paying of current liabilities Sweep accounts if possible. Current Ratio Formula Current Ratio = Current Assets/ Current Liabilities It is the liquidity ratio that measures the company’s ability to meet its short term and long term obligations. The ratio below 1 indicates that a company’s liabilities are greater than its assets and suggest that the company would be unable to pay off its obligations if they came due at that point. We can see in the ratio analysis of this company that its current ratio was below 1 and it was 0.94 in 2014 ( benchmark) . But it improved its current ratio and reached to 1.00 in 2015 and 1.10 in 2016. But now, its current ratio has also decreased 0.88, that is not a good sign for the company and so, it would not be able to pay off the obligations. So for improving current ratio, the management of P&G needs to focus on various strategies including its current liabilities and assets which are not a onetime activity. It has to be monitored very carefully throughout the year. P&G should Pay off current liabilities Sell of unproductive assets if possible Rise shareholder’s funds
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Faster rolling of money via debtors will keep the current ratio in control.
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  • Fall '17
  • Yousaf
  • Revenue, Profit margin, Generally Accepted Accounting Principles

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