Liquidity Ratio Analysis

Register to read the introduction… As shown in the above graph the two ratios are used in accordance to show the liquidity of each company. The liquidity ratio is “used to determine a firm’s ability to satisfy its short-term obligations as they come due” in a firm’s operating cycle (Gitman & Zutter, p.65). The first ratio shown in the graph is the current ratio, and is one of the more popular ratios used in finance. Current ratio is a determinant of whether or not a company is able to have the funds for obligations as they come due. DISH Network has a fluctuation pattern over the five years that are given. In 2007 DISH Network had a current ratio of 1.00, and then 0.70 in 2008—which is the lowest over the five year—period, while in 2009 the current ratio recovers to 1.06. To say the least, the ratio teeters down to 1.02 in 2010, but achieves its highest current ratio of 1.16 in 2011. This shows that DISH Network overall has a good current ratio that proves the company to be acceptable in its liquidity. However, in 2008 the firm was considerably lower than the accepted average of 1.00 of the current ratio. This could be due to the decrease in cash and cash equivalents the company experienced, because of its major operating income (EBIT) and lack of collecting on accounts receivables. The operating income alone was over ($224) million and the account on accounts receivable was at an …show more content…
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,609 $ 2,014 $ 942 | Net income attributable to DIRECTV Class B common stockholders, for the period of November 19, 2009 through June 16, 2010, including $160 million | exchange inducement value for the Malone Transaction in 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 184 — | Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,609 $ 2,198 $ 942 | Basic earnings attributable to DIRECTV Class A common stockholders per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.49 $ 2.31 $ 0.96