Wk 6 Discussion

Please calculate and comment on other financial ratios for the below company. Please compare and contrast with the below post.


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” I selected Intuit Inc. primarily due to the number of small businesses that utilize their Quickbooks software in addition to the vast number of individuals and small businesses that utilize their TurboTax software. I was intrigued at the opportunity to delve into the financial metrics of this popular company.

Their annual report provides an analysis of their liquidity. Their current ratio ( current assets / current liabilities)  is 1.1:1. This represents an increase of 0.4 over prior year ratio of 0.7:1. The current ratio indicates to creditors the amount of current assets available to meet current liabilities. Simply put, Intuit currently has $1.1 of current assets available to meet each $1 of currently maturing obligations. A current ratio greater than 1 indicates that an entity is able to meet its’ short-term obligations. It also impacts other asset utilization metrics such as cash turnover, accounts receivable turnover and working capital turnover.

Ratios while admittedly important, do not exist in a vacuum. No single metric tells the whole story of an entity’s financial condition. It is important to study year over year trends and the ratios of companies in the same industry.