Compaq , case study finanial analysis

Compaq A. <Tab/>Based on the spreadsheet ratios, evaluate whether the company is strong or weak in the four areas. Strong/Weak? Reason (standards indicated) *<Tab/>Liquidity Strong (Current Ratio = 1.5 ) Liquidity was decreased from 2.3 in 1997 to 1.4 in 1998 below the industry average but its still very near the industry average and this declined was due to several factors; the main factor that in 1998 the Compaq completed its acquisition …

…performance is below standard. In addition, there are some of the non-operating needs are not necessary (dividends). And using debt to finance operating needs. C.<Tab/>Based on the above analysis and as a short-term creditor, do you think the company is a creditworthy (low risk) or not creditworthy (high risk)? (Creditworthy/Low Risk) Most Important Reason(s): Strong leverage, Strong liquidity and strong net operating cycle in inventory and payable.