Solvency and liquidity position
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Select a publicly held company. Look at the most recent Income Statement, Balance Sheet, and Statement of Cash Flows and decide if you will give this company a loan equal to 10% of their retained earnings. Justify your decision in 300 to 500 words.
I picked Target and I would give them the loan but can you tell me how to justify my decision. I have attached the income statement, balance sheet and statement of cash flow.
All the information can be found on Yahoo Finance Target is (TGT).
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This provides the steps to calculate the solvency and liquidity position
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In financial analysis, we need qualitative information and try to read between the numbers. We have to ask all the right questions. Over the years, there are some ratios, which have become more popular and handy for rule of thumb analysis of financial statements. Our purpose in this note is not deride them but to advice the reader to use them properly to derive the correct results. Ratio analysis can also help us to check whether a business is doing better this year than it was last year; and it can tell us if our business is doing better or worse than other businesses doing and selling the same things. In other words it helps in inter firm and intra firm comparison.
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