The Balance Sheet – A Snapshot of Quality

Accounting methods and analysis may provide many clues to the quality of a company. Having liquidity and being able to meet short and long term obligations is essential for any business. Lenders or investors should know that having enough working capital is essential for the success of any business.  Formulas may be used to determine a quick analysis.

For a company to meet short term obligations one might want to use the Quick Ratio:

Current Assets – inventories / Liabilities = Quick Ratio

The Current ratio helps analyze the ability of a company to cover short term obligations.  A current ratio of 2.0 or higher is generally considered attractive.

Current Assets / Current Liabilities = Current ratio

The Debt to Equity Ratio reveals the dependence on debt for the operation of the company.  Generally, the lower the number the less dependence the business has on debt for their operations.

Total Liabilities + Shareholder Equity = Debt to Equity Ratio

The cash conversion cycle (CCC) is useful to measure to view the company inventory and how it applies to production and sales and applies it to operations and terms from creditors.  A shorter work cycle indicates a better position of working capital.

Days Sayles outstanding + Days Payable Outstanding + Days Inventory Outstanding

= The Cash Conversion Cycle.

 A full understanding of the industry along with the individual business will make this analysis more useful. Using a combination of ratios may help a more complete understanding of the balance sheet and helps lenders and investors understand their risk.

A resident of Willowbrook, Illinois, Eric Baumbach is currently studying for a dual bachelor’s degree in accountancy and finance at the University of Illinois at Urbana-Champaign. He is a member of the university chapter of the Alpha Phi Omega service fraternity, served as past director of finance and as a member of several committees. He also serves as a volunteer consultant for entreCORPS, an organization dedicated to developing and offering the best solutions to startups, municipalities and businesses.

Nutritional Education At The Northern Illinois Food Bank

Northern Illinois Food Bank  Image: solvehungertoday.org

Northern Illinois Food Bank
Image: solvehungertoday.org

Eric Baumbach of Willowbrook, Illinois is currently pursuing a bachelor’s degree in finance and accountancy at the University of Illinois at Urbana-Champaign. Involved with several charitable organizations in his Willowbrook community and the Burr Ridge area, Eric Baumbach has done volunteer work for the Northern Illinois Food Bank in Geneva, helping to prepare donations for food assistance programs in the area.

The Northern Illinois Food Bank offers many programs to support the food and nutrition needs of the surrounding communities, including a complete nutrition education program geared for school-aged children between the ages of five and twelve years old. The program uses the USDA My Plate model as the basis for a curriculum that teaches kids about nutritious foods and healthy eating.

The nutrition education program offered through the food bank provides educators with a complete curriculum for each of the food groups in the USDA My Plate model (grains, proteins, dairy, fruits, and vegetables). Curriculums follow a four-lesson format, and each segment includes a video portion, leading the teacher through a sample class, a teacher guide, a suggested activity, a recipe, and a grocery list. For example, one lesson within the vegetable curriculum is called Dip Cups. Kids are introduced to several raw vegetables, learn about their nutritional benefits and how to safely prepare the veggies, and then get to work with classmates to prepare a healthful ranch dip.