Top of Form Industry Financial Ratios Quarter 4 Ratio Calculation TechNova Highest Lowest Average Liquidity Ratios Current Liquidity Ratio (Cash + 3 Month Certificate of Deposit + Finished Goods...

Simulation Analysis 1
Simulation Analysis
Simulation Analysis 2
Introduction:
Financial analysis helps in brining into picture the performance of the organization. With the
help of the financial analysis a company is able to analyze its past performance and is able to
predict its financial health and performance for the future. This is one the major tools which is
used by different investors so as to analyze the financial position of the company.
Financial statement information is a useful tool which is used by both external and internal users,
including investors, creditors, managers, and executives. These reports are analysed in order to
make business decisions, investment decisions and other important financial decision.
In this report we will have a strong focus on analysing the financial health of Technova.com with
the help of the given ratios in the simulation.
Ratio analysis:
Ratio analysis is one of the most widely used tools of financial analysis. It is essentially an
attempt to develop meaningful relationship between individual items or group of items in the
balance sheet or profit and loss account. The objects and utility of ratio analysis is confined not
only to the internal parties but to the credit suppliers, banks and lending institutions also. Ratio
analysis tells about the financial position of the enterprise as to whether the capital structure of
the business is in proper order, whether the capital structure of the enterprise is satisfactory,
whether the credit policy in relation to sales and purchases is sound and whether the company is
creditworthy. Thus, ratio analysis highlights the liquidity, solvency, profitability and capital
gearing position.
Simulation Analysis 3
Liquidity Analysis
Liquidity ratios are used to measure firm’s short term obligations. It helps in comparing short
term obligations with short term resources available to meet these obligations. Liquidity ratios
show the relationship of a firm’s cash and other current assets to its current liabilities.
1. Current Ratio
Current ratio: This ratio indicates the extent to which current liabilities are covered by those
assets expected to be converted to cash in the near future.
Current assets include cash, marketable securities, accounts receivables, inventories and short
term investments. Current liabilities include accounts payable, short-term notes payable, current
maturities of long-term debt, accrued taxes,...