Balance Sheet and Income Statement Commentary
Balance Sheet and Income Statement Commentary
BSA/500 – Business Systems I
July 2, 2012
Balance Sheet and Income Statement Commentary
JB Hunt (Trucking and logistics)
On JB Hunt’s balance sheet for 2011 lists current assets of $513,542,000 and current liabilities of $438,515,000, yielding a current ratio of 1.17, which indicates the company, has $1.17 of current assets for every $1 of current liabilities. The previous year 2010, the current ratio was 0.91. This shows a 29% increase in the current ratio over the previous year. An organization with a current ratio of 2 or higher is usually viewed by lenders to be a safe risk for short-term credit. Based on the 29% increase in current ratio, JB Hunt is in a better position to obtain short-term financial than it was in 2010. However, it is still below the benchmark of 2 that lenders feel to be a safe risk. Under the economic circumstances of the past five years, lenders may take into consideration other factors such as comparing JB Hunt’s current ratio to that of other competing trucking companies.
JB Hunt’s quick ratio for 2011 is 0.95 and for 2010 was 0.70. A quick ratio or “acid-test” measures cash, securities, and accounts receivables of a company in comparison to its current liabilities. The quick ratio is especially important to companies that have a history of challenges with converting inventory into cash quickly. This difficulty could interfere with the company’s ability to pay its short-term debt. A quick ratio between 0.50 and 1.0 is typically perceived as satisfactory, but with a shadow of potential cash-flow problems. JB Hunt’s quick ratio improved by 36% over the previous year, which indicates the company, has improved its ability to meet its short-term obligations.
JB Hunt’s debt to stockholders equity ratio for 2011 is 299% and 242% for 2010. This ratio evaluates the extent to which the company relies on borrowed money for its operations. A ratio over 100% indicates a business has too
BSA/500 – Business Systems I
July 2, 2012
Balance Sheet and Income Statement Commentary
JB Hunt (Trucking and logistics)
On JB Hunt’s balance sheet for 2011 lists current assets of $513,542,000 and current liabilities of $438,515,000, yielding a current ratio of 1.17, which indicates the company, has $1.17 of current assets for every $1 of current liabilities. The previous year 2010, the current ratio was 0.91. This shows a 29% increase in the current ratio over the previous year. An organization with a current ratio of 2 or higher is usually viewed by lenders to be a safe risk for short-term credit. Based on the 29% increase in current ratio, JB Hunt is in a better position to obtain short-term financial than it was in 2010. However, it is still below the benchmark of 2 that lenders feel to be a safe risk. Under the economic circumstances of the past five years, lenders may take into consideration other factors such as comparing JB Hunt’s current ratio to that of other competing trucking companies.
JB Hunt’s quick ratio for 2011 is 0.95 and for 2010 was 0.70. A quick ratio or “acid-test” measures cash, securities, and accounts receivables of a company in comparison to its current liabilities. The quick ratio is especially important to companies that have a history of challenges with converting inventory into cash quickly. This difficulty could interfere with the company’s ability to pay its short-term debt. A quick ratio between 0.50 and 1.0 is typically perceived as satisfactory, but with a shadow of potential cash-flow problems. JB Hunt’s quick ratio improved by 36% over the previous year, which indicates the company, has improved its ability to meet its short-term obligations.
JB Hunt’s debt to stockholders equity ratio for 2011 is 299% and 242% for 2010. This ratio evaluates the extent to which the company relies on borrowed money for its operations. A ratio over 100% indicates a business has too
References: Raibom, C.A. (2010). Core Concepts of Accounting (2nd ed.). : John Wiley & Sons Inc.. Annual Reports, http://www.sec.gov, date retrieved 06/28/2012