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Ratio Analysis for Corrigan Corporation

Please see the attached problem.


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Dear Student,

Please see attached the various ratios calculated.

a. The liquidity ratio is 2.33 in 2005 and 2.11 in 2004. Compared to 2004, the liquidity position has improved marginally. Even the Acid test ratio, of 2005 is better than that of 2004. The acid test ratio has increased from 0.68 to 0.85. So the liquidity position of the company has shown improvement over time. The industry average for current ratio is 2.7. The company's ratio is lower than the industry ratio. So its liquidity position is lower than the industry. The company has to manage its liquidity better in future.

b.The total asset turnover ratio has moved from 2.18(2004) to 2.31(2005). The fixed asset turn over ratio has moved from 7.88 (2004) to 9.84(2005). The inventory turnover ratio has moved from 4.47 to 9.66. So all these ratio's give a clear message that the asset management has ...

Solution Summary

After preparation of a series of financial ratios, the problem includes seven questions to analyze the ratios together with industry comparisons. It is a comprehensive view for 2004 and 2005 results.