Signal Cable Company Essay Example for Free

foretoken Cable familiarity EssayCase 1 Signal cable high society1. Why has the stock price fall despite the fact that the net income has increased? Ans The stock price for Signal Cable company could have fallen for a variety of reasons. Stock price is influenced by the performance of the company, investor expectations as head as general market/economic conditions. In the case of Signal, it is clear that the stock price felled seam despite an increase in the net income. This could be possibly because the company might have make incorrect investment decisions by investing in two manufacturing plants as well tying up more money in inventory. Shareholders may non be happy with this decision and consequently the pick out for the stock may have decreased causing a drop in price. In addition, the dividends offered by the firm has increased in 2004 from 0.187$ per share to 0.214$ per share. Once again, this could be indicative to the market of the company being uncertain of what to do with their resources and not having enough attractive investments to pursue. 2. How liquid would you say that this company is? Calculate the downright liquidity of the firm. How does it compare with the previous years liquidity position? Ans Short bourn solvency or the liquidity of a firm can be measured using the liquidity ratios.This is a measure of short term liquidity helping assess the sufficiency of on-going assets to meet current liabilities. The ratios include i) Current Ratio 2003= 2.50 2013= 2.06. The current ratio of the firm has decreased between the last 2 years. This is mainly driven by a huge increase in the inventory held by Signal Cable Company as well as an increase in the accounts receivables. This could be because creditors are not paying on or delays on the banking side. ii) Quick Ratio 2004= 0.608