Annual Report Ratios Cca and Cce

The CCA current ratio increased from 1.56 in 2007 to 1.71 in 2008. The implication was the ability of repay its short term debt improved. Form 2008 to 2009 this ratio rapidly decreased to 1.36 because largely increase in current liabilities such as interest bearing liabilities outweighed the increase in current asset. However, current ratio of 2 or greater is considered good and CCA's was less than 2 over the last 3 years. This ratio showed that CCA may not have enough funds to cover short term obligation.The CCE current ratio is gradually increasing form 2007 to 2009 respectively 0.75, 0.9, 1.13 due to the increase in asset and decrease in current liabilities. Compared CCA with CCE, the liquidity of CCE was relatively stable. However CCA have a higher current ratio then CCE which means CCA is more liquid.

Excluding inventory to calculate quick ratio, there were huge drop (around 0.6 to 0.5) of quick ratio in both company especially CCA. It is because there were large proportion of inventory in current asset .In 2007 to 2009 CCA's inventories were respectively 36 %, 41% and 30% of its current asset. In comparison with CCA, the inventories of CCE in 2007 to 2009 are respectively 22.9%, 19% and 16.9%. CCA have a larger proportion of inventory, this caused larger drop than CCE. The quick ratio of CCA over 2007 to 2009 is stable and nearly unchanged which around 0.9. CCE have an apparent improvement in quick ratio from 0.48 in 2007 to 0.6 in 2008 then increase to 0.8 in 2009.However the quick ratio of CCA is still higher than CCE which means CCA is more liquid than CCE. For Quick ratio greater than 1 is consider as a liquid firm. However the quick ratio of CCA and CCE is lower than 1 .This illustrated that both CCA and CCE may not have ability to repay short debt without selling inventory.

Base on these 2 ratios CCA seem not that liquid. It is necessary for CCA and CCE to improve their liquidity to avoid liquidity