Student Instructions: As you know, short-term creditors, such as suppliers, want to be paid. They tend to focus on a company's cash flows and its working capital since these are the company's primary sources of cash in the short run. Ratio analysis performed by short-term creditors would include the following: working capital, current ratio, acid-test (quick) ratio, accounts receivable turnover, and inventory turnover. - Use the Hoovers Online site at www.hoovers.com to access financial information for the two companies listed below. (After entering the company name in the site search box at the top of the page and pressing enter, choose the company from the list generated. Then, click on the "Financials" tab and then on "Annual Financials" under the Free Financial Information heading.) Assume that you are a short-term creditor of each company. Using data from the 2000 annual reports of these two companies, perform the ratio analysis that a short-term creditor would perform.
- Hershey Foods Corporation
- Nestlé S.A.
- Comment briefly on the relative short-term liquidity of the two companies.
- What other data might be useful to perform a more effective analysis of this data?
|
2002 McGraw-Hill Higher Education