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# Financial Analysis Of Marcello's Ice-Cream

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FINANCIAL ANALYSIS OF MARCELLO'S ICE-CREAM

Financial Analysis of Marcello's Ice-cream

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Financial Analysis of Marcello's Ice-cream

Financial Ratios

Probably the most widely used financial analysis technique is ratio analysis, the analysis of relationships between two or more line items on the financial statement. Financial ratios are usually expressed in percentage or times. Generally, financial ratios are calculated for the purpose of evaluating aspects of a company's operations.

Liquidity ratios

Liquidity ratios measure a firm's ability to meet its current obligations. We have 3 common types of liquidity ratios:

Acid Test/Quick Ratio

Acid Test/Quick Ratio measures the liquidity position of the Marcello's Icecream . The quick ratio compares the cash plus cash equivalents and accounts receivable to the current liabilities. The primary difference between the current ratio and the quick ratio is the quick ratio does not include inventory and prepaid expenses in the calculation. Consequently, a Marcello's Icecream 's quick ratio will be lower than its current ratio. It is a stringent test of liquidity.

Formula: Quick Assets = Current Assets - Prepaid - Inventory Current Liabilities

Interpretation

Above graph tells us that the company's Quick Ratio is too short and it can not pay it`s debts in the short term, but again, Fixed Assets are present to pay any sort of liability, that's why there's no need to take it negative, although these are not the good ratios.

Acid Test/Quick Ratio

Acid Test/Quick Ratio measures the liquidity position of the Marcello's Ice-cream . The quick ratio compares the cash plus cash equivalents and accounts receivable to the current liabilities. The primary difference between the current ratio and the quick ratio is the quick ratio does not include inventory and prepaid expenses in the calculation. Consequently, a Marcello's Ice-cream 's quick ratio will be lower than its current ratio. It is a stringent test of liquidity.

Formula: Quick Assets = Current Assets - Prepaid - Inventory Current Liabilities

Interpretation

Above graph tells us that the company's Quick Ratio is too short and it can not pay it`s debts in the short term, but again, Fixed Assets are present to pay any sort of liability, that's why there's no need to take it negative, although these are not the good ratios.

Current Ratio

Current Ratio Provide an indication of the liquidity of Marcello's Ice-cream by comparing the amount of current assets to current liabilities. Marcello's Ice-cream 's current assets generally consist of cash, marketable securities, accounts receivable, and inventories. Current liabilities include accounts payable, current maturities of long-term debt, accrued ...
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