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Business
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Number of pages / Number of words: |
10 / 2615 |
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These liquidity ratios are positive because they can justify to short-term creditors that KKD is well worthy of short-term loans. However, further investigation may be needed find out why KKDâs current assets are too high.
LEVERAGE RATIOS
As for leverage ratios, it is important for a company to find its optimal balance between debt financing and equity financing, because there are pros and cons to both...
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Too heavy weighted debt leaves companies vulnerable to creditors if stock prices drop drastically and too much equity financing may become more costly because of dilution of shares and earnings. In this case, in FY2003 KKDâs long-term debt to total capital is 10.12, while the industry norm is 30.75...
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