Question

ii) Please provide sufficient interpretations of the ratios and explain their change (or no change) from the year before, in a 1-2 paragraphs. If there's anything unusual or notable, please explain. Please be cautious about the signs on financial statement figures, especially on the income and cash flow statement. Some companies choose to report expense items as negative numbers because they get subtracted from the revenue to obtain the net income. When calculating the ratios, use your judgement to adjust their signs appropriately.

Please provide an interpretation for Texas Instrument’s Liquidity Ratios in 2017-2018.

Answer 1

The current ratio cash ratio and quick ratio shows the short term liquidity of the company.

Liquidity means the ability of the business to pay its short-term liabilities.

There is a decrease in short term liquidity ratio from 2017 to 2018 in all the three ratios.

The cash ratio measures the absolute liquidity of
the business.
The decrease in cash ratio represents that there is a significant decline in cash and bank balance.
It has also impacted the quick and current ratio.
It tells that firms working capital management is becoming weak & there is a decrease in capacity of meeting short term liabilities.