Financial Ratios
Based on the provided resources, I will analyze Hillside, Inc. using a financial ratio. Here's an example breakdown:
Chosen Ratio: Current Ratio
Explanation: The current ratio measures a company's short-term liquidity, indicating its ability to meet current obligations with current assets. A higher ratio suggests better short-term financial health.
Formula: Current Ratio = Current Assets / Current Liabilities
Data from Financial Ratio Calculations (Wk 4 Summative Assessment):
Let's assume the following data is available from the provided worksheet:
- Current Assets: $5,165.27 (millions)
- Current Liabilities: $2,955.20 (millions)
Calculation:
Current Ratio = $5,165.27 / $2,955.20 = 1.75
Interpretation:
Hillside, Inc. has a current ratio of 1.75. This means that for every $1 of current liabilities, the company has $1.75 of current assets. This indicates a moderate level of short-term liquidity. Hillside should be able to cover its short-term obligations with its current assets.
Note: This is just an example. The actual ratio you calculate will depend on the data provided in the Financial Ratio Calculations worksheet.
Additional Considerations:
- Industry benchmarks: It's important to compare Hillside's current ratio to the average current ratio in its industry. This will provide a better understanding of how Hillside stacks up against its competitors.
- Long-term solvency: While the current ratio assesses short-term liquidity, a more comprehensive analysis would involve calculating other financial ratios like the debt-to-equity ratio to understand Hillside's long-term solvency.
By analyzing various financial ratios, you can gain valuable insights into Hillside's financial health and make informed recommendations regarding its potential acquisition.