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Pages:
1 page/β‰ˆ275 words
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Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
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Date:
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Topic:

Describe And Quantify Historical Liquidity Trends And Underlying Drivers

Essay Instructions:


Describe and quantify historical liquidity trends and underlying drivers.
· Describe if liquidity is adequate to support the ongoing needs of the business and provide sufficient margin for operating financing.
· Assess current ratio and/or working capital relative to financial covenants proposed, if applicable.
· If the proposed financing has a material impact on the entity’s liquidity, summarize pro-forma liquidity (i.e. what would the balance sheet look like if the company made a large cash purchase).
o Sensitivity analysis. For example, if cash decreases significantly (the company needs to make a large cash purchase) what happens to liquidity? If sales are not as high as we expect, what happens to liquidity? If COGS increase what happens to liquidity?

Essay Sample Content Preview:

Rabobank, N.A. Case Study
Shaw Family Farms, LLC
Name
Course
Date
Describe and quantify historical liquidity trends and underlying drivers. 
The current ratio (the ratio of current assets to current liabilities) increased from 2015 to 2017 driven by higher growth in the current assets, but the current liabilities grew at a faster rate in 2018 and the current assets decreased. The farm had lower cash holdings in 2018 at 517,528, less even as the cash invested in growing crops increased over the four year period. The operating line of credit was 999, 000 compared to only 9,410 in 2015.
Describe if liquidity is adequate to support the ongoing needs of the business and provide sufficient margin for operating financing. The current ratio is above 1 and this indicates that the short...
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