Finalcial Management Control
Vodafone Ratio Analysis
What 's the concept of Ratio? involves methods of calculating and interpreting financial ratios to analyze & monitor the firm’s performance
The liquidity of a firm is measured by its ability to satisfy its short-term obligations as they come due.
A measure of liquidity calculated by dividing the firm’s current assets by its current liabilities.
Generally, the higher the current ratio, the more liquid the firm is considered to be.
Total current assets
Total current liabilities
better than 2005
A current ratio of 2.0 is occasionally cited as acceptable, but a value’s acceptability depends on the industry in which the firm operates & for vodafone it is not quite acceptable cuz it should have high liquidity rate due to everyday high traffic of transactions…
Quick Ratio (Acide-Test) Ratio
Quick Ratio =
Current Assets - Inventory
A quick ratio of 1.0 or greater is occasionally recommended, but as with the current ratio, what value is acceptable depends largely on the industry, So For VODAFONE it is not a quite perfect quick ratio neither on 2005 nor on 2006 due to the high traffic transactions of everyday they should have a higher liquidity ratio.
Inventory Turnover it measures the activity or liquidity of a firm's inventory
Inventory Turnover =
Cost of God Sold
As for VODAFONE the inventory turnoveris matching the industry activities
Average Collection period =
Average Sales / day
on the average it takes the firm from 30.2 days on 2005 & 23.5 days on 2006, it's