| January 30th 2012 | | Kyla Keast
COMM1006
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[Case 3.4 GE Capital Canada] | Case Hand-in |

Executive Summary For the case of GE Capital Canada, Clark Carriers submitted a request for a loan amounting to $270000. It was first confirmed that Clark Carriers met the minimal requirements set out by the commercial equipment financing division of GE for loans. Cash flow was then analyzed to ensure that Clark Carriers has sufficient cash flow from operations to make payments on current loans. Next the financial ratios were analyzed to ensure that Clark Carriers was efficient in its profitability, liquidity, stability, efficiency and growth in which they proved to achieve positive outcomes in all areas, especially profitability. …show more content…

Clark Carriers current ratio decreased over the 24 month time period from 3.4:1 to 2.3:1, however this is still an efficient current ratio. It means that for every dollar in current liabilities, there is $2.3 in current assets. Although this ratio has decreased throughout the 24 months, it is still above the industry average and gives Clark Carriers a sufficient safety net if they were put in a situation in which they needed to liquidate current assets to quickly pay off current liabilities.

Acid Test Ratio This ratio is similar to current ratio as it is a measure of short term liquidity, however acid test ratio is a more accurate measure of immediate liquidity. Clark Carriers acid test ratio has also decreased, however it is still 1.7:1 which once again is above the industry average and means that for every $1 of current liabilities there is $1.7 in immediate liquefiable current assets. Clark Carriers therefore has sufficient amounts of liquefiable current assets if current liabilities were needed to be paid.

Working Capital This liquidity ratio measures the excess dollar amount of current assets in Clark Carriers over current liabilities. Their working capital has slightly increased over the 24 month time period being analyzed to $34421. This ratio varies on the size of the company, however Clark Carriers working capital is positive, meaning that they have a heightened ability to meet its current