Analyze S&J Plumbing, Inc.'s balance sheet below: Calculate the following: Current ratio Quick ratio Net working capital Write a report of 2-3 pages that discusses the liquidity of S & J Plumbing...

S&J Plumbing Inc. Balance Sheet Analysis
The business organizations have to meet both long and short term financial obligations as and when they falls due and are repaid (Altman E.I. 1968). This may be through total repayment of the due amount or through servicing of the interests on loans. On the other hand liquidity of the company is the ability of the company to reconcile the financial obligations during the due date. The solvency on the other hand, measures the ability of the firm to settle the financial through company’s positive cash flow to meet its short and long term liabilities. The current ratio and acid test or quick ratio on the other hand is the ability of the company’s to meet and repay its short term or daily financial obligations and debts as and when they falls due.
As per the balance sheet of S&J Plumbing Inc. it can be observed that the net account receivables of the company are more than the net payables which implies that the company has more debtors than its creditors. Therefore, to maintain a healthy financial position it has to collect debt much earlier than the repayment of credits.
    S&J Plumbing, Inc.'s
    Assets
     $
    Liabilities
     $
    Cash
    100
    Notes payable-bank
    200
    Net Account Receivable
    400
    Account Payable
    300
    Inventory
    200
    Accrued expenses
    100
    Total Current Assets
    700
    Total Current Liabilities
    600
    Ratio Analysis
    Current Ratio
    1.17
     
     
    Quick Ratio
    0.83
     
     
    Net Working Capital
    100
Analysis
Current ratio is also known as the liquidity ratio which measures the ability of the company to repay the short term...