Financial health of ABC Company

Financial health of ABC Company
Name
Institution

Financial health of ABC Company
Q1
Efficiency Ratios & Solvency Ratios
Debt Equity Ratio=Total Liabilities of the firm/Total Equity of the Firm
=126000/156000
=0.810
Debt Ratio=Total Debt/Total Assets
=126000/272000
=0.460
Equity Ratio =Total Equity for the company/Total Assets Available
=156000/272000
=0.570
Q2
The above ratios depict how the company in question can meet its set financial obligation before they fall due. It is recommended that the ratios be lower since the lower the ratios, the healthier the company and as such ability of the same company to meet its financial obligations. The company is thus called upon to work on its ratios via contributing factors known for inclusion in the ratio analysis. All factors that contribute to the operation of the company need to be kept at optimal level to ensure that the firm meets its financial obligations more precisely.
Q3
First, I have learned about ABC Company’s financial obligations through the ratios. Secondly, through ratios, I have learned about the ABC Company’s performance at a glance (Saidy, Panavas, Harik, Bayoumi, & Khoury, 2017). Q4
The company is on the solvent side. It is obvious that the company can comfortably settle its debts via its equity and assets. The company assets and equity are worth offsetting the debts of the company.
Q5
The ratios indicate that ABC is on the right track in as far as performance in the industry goes. Most retailers in the industry have relatively lower solvency owing to the fact that the inventory in place increases their cash flows.

It is recommended that the company makes a balance between the inflows and outflow of cash in a way that income is more than expenditure. The Debt Equity Ratio that stands at 0. 810 is still high and the firm needs to adjust its liabilities and debts accordingly in the future. The equity ratio and debt ratio at 0.57 and 0.460 are recommendable for use by the firm in the industry. ABC Company is called upon to work on its ratios via contributing factors known for inclusion in the ratio analysis that help in making the ratio lower.

References
Permatasari, M., Ridwan, A., & Santosa, B. (2017). Proposal Of Periodic Inventory Review Policy For Irregular Demand In A Case Study Of Pt Abc Duri-riau. eProceedings of Engineering, 4(3).
Saidy, C., Panavas, L., Harik, R., Bayoumi, A. M., & Khoury, J. (2017, July). Development of a Part Criticality Index in Inventory Management. In IFIP International Conference on Product Lifecycle Management (pp. 184-195). Springer, Cham.