Share
Explore BrainMass

# Financial Analysis: Assess the liquidity position of Wilson

Assess the liquidity position of Wilson Company, given the data in the accompanying Excel file.

#### Solution Preview

See attached Excel file.

We will use the standard liquidity measurement ratios in accounting. We look at four ratios, current ratio, quick ratio, cash ratio and debt ratio. I will describe the formulae for each of the ratios, and compute them in excel. Lastly, I will compare them to industry standard and determine the liquidity position of Wilson Company, relative to other businesses.

Current ratio = current asset/current liability. The current ratios for Wilson are 1.56, 1.61, 1.70, 1.42 for years 20x1 to 20x4.

The current ratio measures how much current asset the company has, relative to its current debt. In other words, if the company is asked to pay all of its short term debts within one year, will the company get in trouble or not. Be very care with the current ratio, as it isn't always better to have a high current ratio. Some types of ...

#### Solution Summary

Financial Analysis: Assess the liquidity position of Wilson Company

\$2.19