Question

Morksen Corp. has enjoyed modest success in penetrating the personal electronic devices market since it began operations a few years ago. A new line of devices introduced recently has been well received by customers. However, the company president, who is knowledgeable about electronics but not accounting, is concerned about the future of the company.
Although the company has a line of credit with the local bank, it currently needs cash to continue operations. The bank wants more information before it extends the company’s credit line. The president has asked you, as the company’s chief accountant, to evaluate the company’s performance by using appropriate financial statement analysis, and to recommend possible courses of action for the company. In particular, the president wants to know how the company can obtain additional cash. Summary financial statements for the past three years are available below.
Required:
1. Evaluate the company’s performance and its financial condition for the past two years. Select six appropriate ratios to analyze the company’s profitability, liquidity, and solvency for 2013 and 2014, and explain to the company’s president the meaning of each ratio you calculate.
2. Based on your analysis of the ratios that you computed in (1), what recommendation would you make to the president for obtaining additional cash?
MORKSEN CORP.
Consolidated Statements of Financial Position
At December 31


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  • CreatedAugust 04, 2015
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