Financial statements for Blacksea plc for the years ended 30 June 2009 Assignment

Financial statements for Blacksea plc for the years ended 30 June 2009 and 2010 - Assignment Example The assets can be bifurcated to have current and fixed assets. Current assets can be quickly converted into the cash within a few months time in the normal course of operations. Fixed assets, also called long term investments of the company in land, plant, building, equipment, fixtures, furniture etc. have longer life period and they last for several years or decades over its useful life. It is nature of the business that decides whether the company will have more capital employed in the current assets or in the fixed assets. There is nothing good or bad per se where assets are deployed; however, when it is compared with the other companies in the same industry group, it can provide an idea whether assets are deployed efficiently or not. So goes with liabilities of the company. They can be bifurcated in the current and long-term liabilities. Current liabilities constitute those payments which are to be paid within a few months. Long-term liabilities mean long-term loans, mortgage payments and other liabilities of similar nature that are to be paid in several years. The financial analysis based on these factors will tell us about the liquidity of the company. This will also tell us about the risk that investors carry by investing in the company. It is important to know whether company’s current assets are sufficient enough to pay for the current liabilities. (Atrill & Mclaney1997) Current ratio of the company in the year ended June 2009 was noticed at 1.46:1, which further improved to 2.73:1 during the year ended June 2010. This is quite safe for the company. The current ratio for the same industry group is noticed at 2.5:1 so it can be said that Blacksea enjoys somewhat superior current ratio as per the year 2010. Creditors should have no problem in lending to the company based on the existing current ratio. Similarly, gearing ratio (debt/equity) in the year 2009 was pretty