2002 is the first year for Ainsworth to go public. One of issues is that delays in licensing, due to statutory probity examinations on new directors and new unexpected requirements regarding harm minimization in NSW, limited the company's ability to sell machine in major jurisdictions. Another is that the regulatory requirements and market driven issues prompted the company to undertake technical upgrades the platform for all installed machines.
3. Financial Analysis:.
3.1/ Liquidity.
Liquidity is of vital importance in the area of financial risk or solvency, which refers to the ease with which assets can be converted to cash in the normal course of business. Many of businesses have gone bankrupt because of cash flow problems in particular liquidity, therefore the term of current ratio and liquid ratio are used to compare the abilities to pay short term (current) debt between two different companies.
Firstly, current ratio is a measure of how much liquidity the company has, this is simply the current asset divided by the current liabilities. As showed in figures below, Aristocrat's current ratio of 1.77 is normally sufficient to meet near-term operating needs as a general rule, A current ratio that is too high as 5.64 of Ainsworth can suggest that company is holding assets instead of using them to grow the business. Actually, that could not the worst thing for the business, but potentially could impact long-term returns. .
Item / Company Name Aristocrat ($K) Ainsworth ($K).
Current ratio 1.77:1 5.64:1.
Inventories/current asset 1/3 1/2.
Quick ratio 1.2:1 2.8: 1.
Furthermore, the quick ratio is simply current assets minus inventories divided by current liabilities. By taking inventories out of the equation, the liquid ratio helps to check and see if a company has sufficient liquid assets to meet short-term operating needs or there are sufficient assets which are readily convertible to cash to meet debts.