These assets could range from inventory, to cash, to account receivable. Cash in particular is of interest in the discussion as it will only depreciate in value over time. As such cash should be appropriate used to generate more earnings in the future through various projects management deems necessary. From my personal opinion, if a company has a high current ratio and low inventory turnover indicates the inability of the company to sell its products. As such, it is forced to hold the products in inventory further increasing its holding cost. Again, from these ratios, this is a company that may need to extend favorable credit turns to sell products, which could further lead to customer defaults. However, the higher the current ratio is, the better the company's ability to succeed in the future.
Quick Ratio
. This ratio is more specific than the current ratio as it helps identify the assets which could easily and quickly be sold in case of needed funds. The ratio is regarded as an acid test of liquidity for a company. It expresses the true 'working capital' relationship of its cash, accounts receivables, prepaid and notes receivables available...
The ratio measures how the company is leveraging its debt against the capital employed by its owners. For example, if the total debt to equity ratio of 0.19, that means it is positive, because the company has $0.19 of debt for every $1.00 in equity. In short it means that the shareholders have more stakes in the company than creditors.
4. Define a non-profit organization and why they need a manager.
A non-profit organization is one in which the earnings are not actively distribute to shareholders but instead retained in the entity. These organizations are often charities, foundations, or endowment funds. Management of these entities to be considered non-profit must not benefit from increased earnings in anyway. Non-profits need a manger because they must generate enough funds to continue operations and expand as necessary. Without management overhead and expenses may become a disproportionate amount of earnings resulting in a subsequent bankruptcy. In order to prevent this excessive waste while also generating earnings, management is needed.
