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Frozen Corp Final

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Excel
School
Strayer University
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Homework
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Frozen Fractal’s Corp
Financial Position
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Professor’s name
Course title
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Memorandum
Analysis of the financial position of Frozen Fractals Corp
To: Owner, Frozen Fractals Corp
From: ………, prospective investor
Date: 8
th
of May 2020
Re: Analysis of the financial position of Frozen Fractals Corp.
In this memo, I will be providing an analysis of the financial position as at 31
st
of December
2016, of Frozen Fractals Corp, and my decision regarding the investment in this company.
Liquidity refers to a firm’s ability to convert its assets into cash. In order to assess the short term
liquidity of Frozen Fractals Corp, the current ratio and quick ratio have been analyzed. In order
to assess the long term solvency of the company, the debt ratio, equity ratio and the debt to
equity ratio have been analyzed.
In terms of liquidity, Frozen Fractals Corp is highly liquid. This is because the current ratio
(current assets divided by current liabilities) is 10.85. In other words, the company’s current
assets are 10.85 times its current liabilities. This indicates that the amount of current assets
Frozen Fractals Corp has to cover its current debts is more than sufficient. A current ratio above
1 indicates that the company is financially healthy in the short term (Amy Gallo, 2015). Since the

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Frozen Fractal’s Corp Financial Position Your name Professor’s name Course title Date Memorandum Analysis of the financial position of Frozen Fractals Corp To: Owner, Frozen Fractals Corp From: ………, prospective investor Date: 8th of May 2020 Re: Analysis of the financial position of Frozen Fractals Corp. In this memo, I will be providing an analysis of the financial position as at 31st of December 2016, of Frozen Fractals Corp, and my decision regarding the investment in this company. Liquidity refers to a firm’s ability to convert its assets into cash. In order to assess the short term liquidity of Frozen Fractals Corp, the current ratio and quick ratio have been analyzed. In order to assess the long term solvency of the company, the debt ratio, equity ratio and the debt to equity ratio have been analyzed. In terms of liquidity, Frozen Fractals Corp is highly liquid. This is because the current ratio (current assets divided by current liabilities) is 10.85. In other words, the company’s current assets are 10.85 times its current liabilities. This indicates that the amount of current assets Frozen Fractals Corp has to cover its current debts is more than sufficient. A current ratio above 1 indicates that the company is financially healthy in the short term (Amy Gallo, 2015). Since the company’s current ratio is way above 1, it is less likely that it will face liquidity risks such as bankruptcy in the short term. The quick ratio, also called acid test ratio ...
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