GLOBUS ENTERPRISES YEAR END BALANCES Assignment

GLOBUS ENTERPRISES YEAR END BALANCES - Assignment Example $81,200 and it is believed that it should be allotted either in attractive investments or transferred to retained profit account. The current ratio of 2.37 shows that the company has sufficient funds for fulfilling its liabilities and it should consider about decreasing the amount of current assets to a significant level so that there is proper balance between the assets and liabilities of short term period within the organization. This balance between the assets and liabilities would prove to be useful for the business in the long term and allow the organization to gain competitive advantage. The net working capital is an important indicator about the proper allocation of a company’s current assets and it is used to review the financial health of the company for one year. Considering the working capital of Globus Enterprises which is $86,800, it is a clear sign of the organization that it is in effective utilization of the company’s resources. It shows that the company has a positive working capital and has appropriate amount of liquid cash to meet the immediate monetary requirements of the business. Positive working capital for the business is a highly advantageous position for the business. Businesses require capital for expansion and other investments and positive working capital would assist the business in accomplishing such goals. It has to make sure that its working capital ratio is grown in an upward direction in upcoming years so that it does not have to face any sort of financial problem and it can smoothly run its business operations. The figure also ensures that it is able to pay off its current liabilities without any difficulty and it can even bear any expense required for the prepayments with convenience. Globus Enterprises has debt to equity ratio of 1.1 which is a good sign of the company’s internal health. For every organization, the ideal ratio is in between 1-2 and the company’s figure