Starting in 1936, in Cleveland, Ohio, K. Huffman founded Huffman Trucking. “The growth of the company was the direct result of World War II and the increased demand for carrier services between factories in the Midwest to ports on the East Coast.” As of today, Huffman Trucking has transitioned from a single tractor trailer to 925 drivers and 800 tractors, and continues to provide the same delivery service across the nation. Our financial analysis team has looked over financial statements to determine the liquidity, profitability, and solvency ratios of Huffman Trucking. These ratios provide detailed information to creditors, investors, and employees. Together, the ratios reveal data related to the performance and position of Huffman Trucking. (University of Phoenix, 2011).
. JAY What do the liquidity, profitability, and solvency ratios reveal about the ...view middle of the document...
Shareholders and long-term creditors would be most interested in solvency ratios of the company. (University of Phoenix, 2011).
As we look at how Huffman Trucking stands and their ability to pay short term debt, we notice a tradition of good performance. In recent years, we have seen our working capital meet the current market demand as well as our and our obligations to our creditors. From 2002 to 2006, our working capital increased from 1.16:1 to 1.26:1. This means for every dollar of current liability we may have we have $1.26 of current assets. According to the financial report, we have increased our debt from 1.12:1 in 2002 to 1.22:1in 2006. Our increased working capital will help pay our entire obligation. (University of Phoenix, 2011).
In regards to profit, Huffman trucking has seen consistence in numbers. However, from 2002 to 2006 our profit margin was in the low 2%. In order for numbers to increase, we need to either cut operation costs or find other plant assets that are more fuel efficient. From 2002 to 2006 we have seen an increase on our percentage of debt to total assets. Huffman Trucking jumped from 64.4% to 70.51%. This information tells us that Huffman Trucking is doing fine financially; however, there are aspects within the company that could improve our financial assets and decrease our liabilities. (University of Phoenix, 2011).
In conclusion, the ratios provided information regarding liquidity, profitability, and solvency for Huffman Trucking. The ratios provide detailed information for creditors, investors, and employees. The advantages of these ratios are that they provide detailed information for financial decision making. This information is used to determine if a company has enough cash flow, generating enough cash flow, and is stable enough to continue on. Below are our financial analysis team’s findings of Huffman’s Trucking liquidity, profitability, and solvency ratios, and income and balance statements. (University of Phoenix, 2011).