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Ben And Jerry's Financial Statement Analysis Through Essay

Ben and Jerry's Financial Statement Analysis Through a ratio analysis of Ben and Jerry's comparative balance sheet and comparative income statement for 2004 and 2005 it was determined that Ben and Jerry's appears to be financially stable. Three different types of ratios were used to assess the company's health including liquid rations, profitability ratios, and solvency ratios.

Liquid ratios that were analyzed included working capital, current ratio, and acid test ratio. "Liquidity ratios measure a firm's ability to meet its current obligations" (Credit Research Foundation, 1999). Based upon the working capital, it was determined that in 2004, Ben and Jerry's had $8,200 on hand to satisfy contingencies and the number rose to $11,100 in 2005, which appears to indicate that Ben and Jerry's was more financially prepared the following year. Furthermore, an analysis of the current ratio, which measures Ben and Jerry's ability to pay off their debts determined that Ben and...

Although the slight decrease in monies could indicate that Ben and Jerry's had less money to pay off debts in 2005, an acid test found that, if needed, Ben and Jerry's could easily acquire $1.07 in cash for every $1 in debt, up from $0.71 in cash for every $1 in debt in 2004. Given these figures, it can be determined that Ben and Jerry's is financially stable and ready to pay off any and all debts at one time without going broke.
An analysis of profitability ratios also determined that Ben and Jerry's appears to be gaining profits from year to year, or at least from 2004 to 2005. Profitability ratios "measure management's ability to control expenses and to earn a return on the resources committed to the business" (Credit Research Foundation, 1999). An analysis of Ben and Jerry's net income to net sales helped to determine the company's profit margins…

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References

Credit Research Foundation. (1999). Ratios and formulas in customer financial analysis.

Accessed 17 August 2012, from http://www.crfonline.org/orc/cro/cro-16.html.
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