Celia
* The current ratio is equal to the current assets divided by the short term liabilities. Danone current ratio is low. The firm hasn’t enough cash available or liquid assets in order to pay the short term liabilities. It should be over 100% next year. Short term creditors prefer a high current ratio because that means they take low risk. The shareholders prefer a lower current ratio which means more current that means the assets are working to grow the business. * Quick ratio is equal to the short term assets minus inventory divided by the short term liabilities. In the current ratio we took into account the inventories. But Inventory can include some items which aren’t easy to liquidate quickly. So for the quick ratio we cut the inventory from the current assets. The inventory of Danone decrease every year but from 2008 to 2009 the short term liabilities increase of 16%. This is due to a new loan … so, the quick ratio in 2009 decrease of 17% compare to 2008. * Inventory rotation is equal to the inventory divided by the turnover the result multiply by 360. This ratio is very good for Danone. Danone didn’t keep its products in inventory long time, that means also Danone prefer to have cash. * Supplier payment is equal to the payables divided by the purchases times 360. The result of Danone in 2009 is 106 days which is a too long. Danone should pay their suppliers in 60 days but it’s good that is longer than the customers’ payment. If