The financial position of Kenetech Corp Financial Analysis can be examined by having a look at its ratio analysis.
We can see in appendix 1 how the earnings has been decreasing throughout the years after 2005. The fact that the gross revenue margin has decreased as well recommends that the cost of sales have not gone down at the very same pace. The declining net success, revealing a negative trend from 2006 to 2007 recommends that costs have actually increased much more than the business has the ability to manage given its present resources. With a long term financial obligation contributing to the interest cost, Kenetech Corp Financial Analysis is in alarming requirement of an alternative income stream.
Declining Liquidity: We can see a significant decreasing pattern in the current ratio too showing a fall in liquidity which is another point of concern for Kenetech Corp Financial Analysis especially as it has a long term debt to pay off. With the current possessions not in a position to settle the current liabilities, we can see how the business would remain in a major financial problem unless the capital improves with extra sources of finance.
We might check out the financial condition of Kenetech Corp Financial Analysis further by taking a look at the company's overall financial obligation to total assets ratio in appendix 2. We can see how the total assets of the business have been declining from 2005 onwards. The long term debt has stayed at $160 million while the short term debt has actually increased side by side. Such a scenario has actually brought Kenetech Corp Financial Analysis to a point where its total financial obligation to total assets ratio has increased also. An increasing total financial obligation to total possessions ratio recommends that the risk has actually increased in regards to the company's properties not sufficing to cover its total liabilities. This might not be revealing the general liquidity position however gives clarity in terms of the general financial position of the business.