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Calculate the current ratio and quick ratio for the latest two years, obtain the industry average ratios fromIBISWorld, and analyze the results. This database contains industry reports and market...

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  • Calculate the current ratio and quick ratio for the latest two years, obtain the industry average ratios fromIBISWorld, and analyze the results.
    • This database contains industry reports and market research on more than 1,300 United States industries. The reports provide key data, financial ratios, and benchmarks, plus industry forecasts. IBISWorld’s Data Wizard tool allows comparisons between a chosen company and industry best practices.
  • Discuss what each of these ratios tells you about the company’s current financial condition, and how they compare to the industry averages.
  • Identify the major causes of any changes in these ratios and discuss your assessment of the company based on these changes.
  • Review the balance sheet and the notes to the most recent financial statements, and identify any contingent liabilities.
  • Discuss whether or not you agree with how the company chose to treat each contingency on the financial statements (i.e., recorded vs. disclosed, but not recorded).
  • Discuss the effect on the financial statements of the company’s treatment of the contingency.
  • Discuss whether the contingent liabilities change your assessment of the company.
Answered Same Day Jul 15, 2021

Solution

Tanmoy answered on Jul 15 2021
122 Votes
Corporate Finance – Adobe Inc
Ratio Analysis of Adobe v. Industry
    Particulars
    2018
    2017
    Cu
ent Assets
    4857039
    7247813
    Cu
ent Liabilities
    4301126
    3527457
    Cash and Cash Equivalents
    1642775
    2306072
    Short Term Investments
    1586187
    3513702
    Trade Receivables, net of allowances for Doubtful Debt
    1315578
    1217968
     
     
     
    Adobe Cu
ent Ratio
    1.13
    2.05
    Industry Cu
ent Ratio
    1.10
    1.10
    Adobe Quick Ratio
    1.06
    2.00
    Industry Quick Ratio
    0.90
    1.00
Cu
ent ratio of a firm states its ability to meet the short term or cu
ent obligations. The ideal cu
ent ratio is 2:1. This means the cu
ent ratio is twice the cu
ent liabilities. It indicates satisfactory position of the firm. For Adobe we can observe that the cu
ent ratio in 2018 is 1.13 and in 2017 it is 2.05. While the industry in which Adobe operates and as per IBIS World report is 1.10 in both 2018 & 2017. From this it can be...
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