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Mortgage Complaints Finance Issues

August 15, 2011 12:20 pm admin Finance

A quick review of the current liabilities/ sales ratio shows that the actual ratio is higher than predicted, and with more volatility. In fact, throughout the period this ratio is almost double than that assumed, which may have increased the cost of capital. This could have resulted from less effective liability management.

This is coupled with the increase in the current asset/ sales in the same period, which consistently stayed above the assumed ratio. The sales to current asset ratio measures how well a company is making use of its assets in generating sales. An increase in the reciprocal, therefore, indicates a negative sign as the company uses less of its asset to improve revenue. This may have resulted in decreased amount of inventory or less investment opportunity.

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