Ford Motor Company, Microsoft and Exxon - working capital, current ratio, and quick (acid-test) ratio

I will use liquidity ratios ( workings(a) swell, authorized ratio, and speedily (acid-test) ratio) to realize how much gold is available for the Ford, Microsoft, and ExxonMobil companies to pay their received debts? runniness is the participations talent to convert noncash assets into cash or to arrive at cash in order to escort current liabilities (Shim, Siegel, 1999, p.276). (Note: all horse amounts are in the millions and are cited directly from the yearly reports listed in the references) Working Capital is equal to current assets less(prenominal) current liabilities. It is a safety cushion to creditors. A greater quietus is required when the activity has difficulty borrowing on before long notice (Shim, Siegel, 1999, p.276). The Ford company had a working peachy of ( - $4,528 ) in 2002 ( $40,764 - $45,292 ) and ( -$11,434 ) in 2001. The plus in working outstanding is a favorable point; however, both years resulted in a negative working outstanding and spells nark for Ford. The Microsoft union had a working capital of $44,999 in 2003 ( $58,973 - $13,974 ) and $35,832 in 2002. The increase in working capital is a favorable sign and allows Microsoft to be in good shape. The Exxon Mobil company had a working capital of $5,116 in 2002 ( $38,291 - $33,175 ) and $5,567 in 2001.

The settle in working capital and the low working capital could spell trouble for ExxonMobile. The current ratio is equal to current assets divided by current liabilities. It is used to measure the ability of an enterprise to meet its current liabilities out of current assets (Shim, Siege l, 1999, p.276). The restriction of the ra! tio is that it may rise just prior to pecuniary distress because of a companys desire to improve its cash smirch by, for example, selling fix assets. Such... If you want to get a bountiful essay, order it on our website: OrderCustomPaper.com

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