FIN 370 Week 3 Team Assignment, Financial Ratio Analysis (Berkshire Hathaway)
FIN 370 Week 3 Assignment: A well-known company like Berkshire Hathaway understands the importance of maintaining its financial health. The current ratio does precisely that. It measures the liquidity of the business and can give a sense of the efficiency of a company’s operating cycle or its ability to turn its product into cash. Companies that have trouble getting paid on their receivables or that have high inventory turnover can run into liquidity problems if they are unable to alleviate their obligations (Investopedia, 2018). The current ratio for Berkshire Hathaway is 1.80. Their total assets for the year 2016 consist of 620,854 (in millions) and their current liabilities are 337,853 (in millions). Their current ratio illustrates their ability to manage their assets efficiently and pay off their debts promptly.