Question

Find the financial statements for a publicly traded company, and examine its statement of cash flows. Prepare the cash ratios presented in the Module 7 Readings, and prepare an overview (300 words) of what is revealed about the company by its statement of cash flows and cash ratios.

Answer 1

Answer:-

Here consider the example of Motorola company's balance sheet ending year of 31st december 2014:

• The total current liabilities of Motorola company are = $2,250,000,000.
• Consider the cash and cash equivalents of a motorola company are = $3,954,000,000.
• Cash ratio of a Motorola company = ( the cash and cash equivalents of a motorola company) / (The total current liabilities of Motorola company)
• Cash ratio of a Motorola company = ( $3,954,000,000) / ( $2,250,000,000)
• So,The Cash ratio of a Motorola company is 1.76.
• Which is exceptionally agreeable position as this proportion means the money agreeableness of the firm as for its present liabilities.
• Getting just double the money as contrast with its present liabilities implies that the liquidity is high and there will be less danger of default.
• In the meantime the firm would miss a few returns as this money demonstrates that the firm is keeping the inactive money in its equalization which isn't beneficial and along these lines makes less returns for themselves.
• The perfect money proportion 1:1
• Everything more prominent than that proportion makes less returns for the firm.
• The reason that Motorola keeps such a tremendous money saves is identified with the vast majority of the organizations in a similar area that utilizes this money as a vital contribution for consolidations and acquisitions in future.