Answer The Following Questions After Your Analysis What Is B

Answer The Following Questions After Your Analysiswhat Is Best Care

Answer the following questions after your analysis: What is Best Care’s net working capital for 2011? Show your work. What is Best Care’s debt ratio? Show your work. APA format, must be 2-3 pages -See word document for Balance Sheet (Project 2) that has to be completed. -See attachment "balance sheet analysis" for reference. -See two videos A. B.

Paper For Above instruction

Based on the provided balance sheet for Best Care in 2011, this analysis will calculate the company's net working capital (NWC) and debt ratio, which are critical indicators of the company’s liquidity and financial leverage, respectively. To perform these calculations accurately, the relevant financial data from the company's balance sheet is essential. As the specific figures are not provided here, this paper will outline the methodology, demonstrate sample calculations using assumed data, and reference relevant financial principles and sources.

Net Working Capital (NWC) is defined as the difference between a company's current assets and current liabilities:

NWC = Current Assets – Current Liabilities

This measure indicates the company’s short-term liquidity position—its ability to cover its short-term obligations with its short-term assets. A positive NWC suggests that the company has sufficient resources to meet its upcoming operational needs, while a negative NWC might signal liquidity concerns.

Suppose according to the balance sheet, Best Care's current assets in 2011 were $500,000, and current liabilities amounted to $300,000. The calculation of net working capital would be:

NWC = $500,000 – $300,000 = $200,000

This indicates that Best Care had $200,000 in excess current assets over current liabilities, suggesting a healthy liquidity position in 2011.

Debt Ratio is a measure of financial leverage and is calculated as the proportion of total assets financed by debt:

Debt Ratio = Total Debt / Total Assets

Total debt typically includes both short-term and long-term liabilities. A lower debt ratio indicates less leverage and potentially lower financial risk, whereas a higher ratio signifies that a greater portion of the company's assets are financed by debt, increasing its financial risk.

Assuming from the balance sheet, Best Care's total liabilities in 2011 amounted to $400,000, and total assets were $600,000, the debt ratio can be calculated as:

Debt Ratio = $400,000 / $600,000 = 0.6667 or 66.67%

This suggests that approximately two-thirds of Best Care's assets were financed through debt in 2011, indicating a relatively high leverage level but also the potential for increased financial risk.

Conclusion

This analysis illustrates the methodologies used to assess key financial indicators based on balance sheet data. To complete the actual calculations for Best Care, precise figures from the 2011 balance sheet are necessary. In practice, financial managers and analysts rely on these metrics to evaluate liquidity, solvency, and financial stability, guiding strategic decision-making.

References

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  • Securities and Exchange Commission (SEC). (2020). Financial reporting manual. Washington, DC: SEC Publications.
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