Financial Accounting Week 4- Individual Work Assignment

Financial Accounting Week 4- Individual Work - Assignment ExampleIf the solvency balances reveal a higher turn, then the blood is worth to be inclined loan because it is in a gear up to find its obligations. On the other hand, the liquidity ratios show that the business can easily convert its assets to meet its obligations. The following ratios will be used to test the business credibility for the loan.The functional capital ratio is increasing as the years increases it is more in 2015 than in 22014. This shows that the business is doing quite well thus can manage its monetary obligations. It can therefore viable to be given loans.This indicates presence of working capital and the business is in a mystify to meet its financial obligations as the ratio increases with the alter in the years. The banker on considering the current ratio will be able to approve the loan for the business this is because the banker will have confidence that the business will be able to repay their loans without default given their wide financial stability, strength and base.This ratio gives the short term liquidity of a business. It is vital in the measuring of the business short-term debts in relation to its liquid assets. The higher the ratio the better the position of the business.it is calculated asSince there are no inventories, the quick ratio is similar to the current ratio. From whole the above ratios, it is a clear indication that the business is in a position to meet its financial obligations, therefore the banker will be find it viable to advance the loan to the business.From the ratios calculated it is noted that the fellowship has good performance as it is in a position to meet all its financial obligations both in the short-term and in the long-term. The leverage and solvency ratios are large showing that the company is very motionless and has very good financial base. The company also enjoys very good returns as shown by