Ratio Analysis Ratio analysis is a tool that can be used to compare current year results and financial position to previo be examined with the ratios us years and also to competitors and to industry norms. There are four main areas that can Liquidity: refers to the availability of resources to meet short-term cash requirements Profitability: refers to the company's ability to use its assets efficiently to produce profits Market Prospects: useful for analyzing corporations with publicly traded stock. Solvency: refers to a company's long-term financial viability and it ability to cover long-term . obligations Make sure ALL RATIOS are expressed with at least 1 decimal place: x.x or xxx% Liquidity Ratios Working Capital What is the amount of net working capital for the current year and previous year? (Current Assets- Current Liabilities) Previous Year Current Year Current Ratio e curr Compute the current ratio for the current year and for the previous year. Current Ratio Current Assets Current Liabilities Current Year Previous Year How did the current ratio change from the previous year to the current year? Has the company established lines of credit to get working capital if needed? 18 1 P a