WGU C298 NWM6 Task1
Reading and Understanding Financial Statements
Western Governors University
C928: Financial Management for IT Professionals
, Current Ratio Measure of Liquidity for Spar kit
Liquidity means the extent to which a business has money and other assets that could
readily available be turned into money. (Blackstaff, 2012, p. 220)
The current ratio measure of Liquidity for Spar kit was 1.38 for Fiscal Year 2.
Since the ratio is more than 1, this can be said as a good indicator of liquidity.
1. Discuss why it is important for Spar kit’s IT manager to
understand the current ratio.
Spar kit’s IT manager is required to understand the current ratio as it indicates
whether the business can fulfill its obligations when they become due.
The ratio basically informs whether the current assets are enough to meet the current
liabilities.
Best ratio indicates good business health, which means that current assets are more
than current liabilities by a factor of 1 or more. either way, if the current assets are not
enough to meet current liabilities, it is a sign that the business is in trouble.
Best liquidity can Assists the IT Manager best plan projects and resources and invest in
innovative proposals other than of resorting to cost-cutting measures to preserve money
flow.
2. Discuss how the current ratio influences Spar kit’s
IT department’s decision-making.
The current ratio of 1.38 means the company has $1.38 in current assets for every $1.00 in
current liabilities. This is a sign of moderately healthy liquidity. In this situation, though
the organization can cover its short-term obligations, it is not high enough to let it spend
large amounts of cash.
It can influence the IT department’s decision-making in the following ways:
i. Ongoing Project Funding: The department can undertake planned initiatives, but
projects requiring discretionary spending must be thoroughly reviewed.
Reading and Understanding Financial Statements
Western Governors University
C928: Financial Management for IT Professionals
, Current Ratio Measure of Liquidity for Spar kit
Liquidity means the extent to which a business has money and other assets that could
readily available be turned into money. (Blackstaff, 2012, p. 220)
The current ratio measure of Liquidity for Spar kit was 1.38 for Fiscal Year 2.
Since the ratio is more than 1, this can be said as a good indicator of liquidity.
1. Discuss why it is important for Spar kit’s IT manager to
understand the current ratio.
Spar kit’s IT manager is required to understand the current ratio as it indicates
whether the business can fulfill its obligations when they become due.
The ratio basically informs whether the current assets are enough to meet the current
liabilities.
Best ratio indicates good business health, which means that current assets are more
than current liabilities by a factor of 1 or more. either way, if the current assets are not
enough to meet current liabilities, it is a sign that the business is in trouble.
Best liquidity can Assists the IT Manager best plan projects and resources and invest in
innovative proposals other than of resorting to cost-cutting measures to preserve money
flow.
2. Discuss how the current ratio influences Spar kit’s
IT department’s decision-making.
The current ratio of 1.38 means the company has $1.38 in current assets for every $1.00 in
current liabilities. This is a sign of moderately healthy liquidity. In this situation, though
the organization can cover its short-term obligations, it is not high enough to let it spend
large amounts of cash.
It can influence the IT department’s decision-making in the following ways:
i. Ongoing Project Funding: The department can undertake planned initiatives, but
projects requiring discretionary spending must be thoroughly reviewed.
