Roxanne McCarthy
FIN/571
June 9, 2014
Susanne Elliott
Interpreting Financial Results
Entrepreneur and business proprietors employ the financial ratios for their means to compute the administrations levels along with their accomplishments. Financial ratios comprise the assets, the result of the output, and the liquidity. The liquidity ratios maintain the company directors through determining in addition to satisfying the companies short-term monetary requirements.
The asset proceeds ratios are gauges, which offer an account of the proceeds to supervisors, explaining how well the company is doing. The long-term economic wants are analyzed through the fiscal control of the company. While taking into account the merchandise or goods is received without help, he or she ought to reflect on the productivity of the ratios.
In addition, please see the Excel report for Lithia Motors, Inc.
Ratio
The aspects of the current ratio would be the current assets, which is then divided through the liability. The current ratio recognizes the businesses probabilities to compensate for the short-term liabilities; the more liquidity shows an excellent indication in favor of potential organizations letting this business getting credit in the future. Nevertheless the current ratio must not greatly surpass the standards of additional opponents. This could be revealing of unprofessional conduct of current assets furthermore; a lesser amount of cash flow representing the shareholders.
Table showing Financial Ratios of Lithia Motors, Inc.
Below is the table for the financial ratios for Lithia Motors, According to the website (Morning Star, 2014).
31-Dec-13
31-Dec-12
31-Dec-11
A. Liquidity Ratios:
1. Current ratio = Current Assets/ Current Liabilities
1.24 times
1.29 times
1.42 times
2. Quick Ratio = Quick Assets/ Current Liabilities
0.26 times
0.29 times
0.31 times
B. Leverage Ratios:
1. Debt Ratio = Debt/ Total Assets
69.00%
71.32%
67.97%
References: Yahoo Finance. (2014). Retrieved from http://finance.yahoo.com/q/is?s=lad Morning Star. (2014). Retrieved from http://quotes.morningstar.com/stock/LAD/s?t=LAD.