The owner of a small merchandising business that sells supplies to commercial plumbers keeps finding herself scrambling to make payroll. She is confused as to why she runs short on cash. Her bookkeeper produces a monthly income statement and it regularly shows sufficient profits to pay her bills and make payroll. She asks you for advice and provides you monthly income statements for the last year and a current balance sheet. What financial ratios or analysis would you use to help uncover her ability to meet her monthly payroll?

Answer rating: 100% (QA)

To assess the owners ability to meet monthly payroll I would analyze liquidity ratios and cash flow ... View the full answer