Current Ratio

Current ratio:

6900/3200 = 2.2

Total asset:

568/17900 = 0.03

Arcadia’s current ratio of 2.2, slightly above the median average of 2.07, is good

because it means they have a large amount of cash and marketable securities. I am not

certain that the total asset is correct, but at 0.03 it is smaller than the median average,

which is 1.01. This means their revenue generation is not very effective from the asset

base.

Asset/ Equity:

17,900/7900 = 2.27

Long –term debt/ Equity:

10000/7900 = 1.26

Total Margin:

32/568 = 5.63

Asset/ Equity and Long-term/ Equity are both leverage ratios. Asset/Equity is a capital

structure. The choice of the mix of equity and debt financing determines the

organization’s capital structure. Long-term debt/ equity are coverage; this means it is a

choice of how much interest to pay. The organization’s cash flows and earnings

determine which interest obligations are met.

Total margin is a profitability ratio that indicates the amount of profit earned per dollar.

However, it gives no information about the economic return in place, or the ability of

the organization to pay its equity holders the necessary return. Instead, it gives

information about the ability of the organization to maintain its unit prices above cost

and not about its ability to generate economic return.

An asset/equity ratio above 1.0 signals that the organization is in debt. Every dollar of

Arcadia’s equity controlled $2.27 of its total assets.

The long-term debt/equity is 0.40 (or 40%). This is higher than the 31% median average

The total margin is in the amount of profit earned per dollar of revenue. This means that

Arcadia could not have earned profit on its revenues