Analyze the following balance sheet: Consolidated Balance Sheets - USD ($) $ in

Question

Analyze the following balance sheet:

Consolidated Balance Sheets - USD ($) $ in Thousands Dec. 31, 2016 Dec. 31, 2015 Current assets: Cash and cash equivalents (Note 14) $ 2,045,961 $ 1,939,469 Short-term investments (Notes 4 and 14) 150,000 100,000 Accounts receivable, net (Note 5) 1,631,676 1,383,823 Inventories, net (Notes 2 and 6) 2,479,958 2,245,469 Other current assets (Note 13) 198,798 185,644 Total current assets 6,506,393 5,854,405 Property, plant and equipment, net (Note 7) 5,078,650 4,891,153 Goodwill (Note 3 and 8) 2,052,728 2,011,278 Other intangible assets, net (Note 3 and 8) 866,835 770,672 Other assets (Note 9) 718,912 799,461 Total assets 15,223,518 14,326,969 Current liabilities: Short-term debt (Notes 11 and 14) 17,959 51,315 Long-term debt due within one year (Notes 11 and 14) 600,000 Accounts payable (Note 10) 838,109 566,527 Salaries, wages and related accruals (Note 17) 428,829 289,004 Accrued expenses and other current liabilities (Notes 10, 13 and 15) 505,069 478,327 Total current liabilities 2,389,966 1,385,173 Long-term debt due after one year (Notes 2, 11 and 14) 3,739,141 4,337,145 Deferred credits and other liabilities (Notes 2, 13, 15, 17 and 19) 839,703 754,774 Total liabilities 6,968,810 6,477,092 Commitments and contingencies (Notes 13 and 15) Nucor stockholders' equity (Notes 12 and 16): Common stock (800,000 shares authorized; 379,334 and 378,566 shares issued, respectively) 151,734 151,426 Additional paid-in capital 1,974,672 1,918,970 Retained earnings (Note 2) 7,630,916 7,316,910 Accumulated other comprehensive loss, net of income taxes (Notes 2, 13 and 20) (317,843) (351,362) Treasury stock (60,597 and 60,604 shares, respectively) (1,559,614) (1,558,128) Total Nucor stockholders' equity 7,879,865 7,477,816 Noncontrolling interests 374,843 372,061 Total equity 8,254,708 7,849,877 Total liabilities and equity $ 15,223,518 $ 14,326,969

Explanation / Answer

First thing to look into a company's banakce sheet is Total Equity, in this case total equity is a positive figure which is good, as it shows the company's assets are in excess of its libilities.

Now,

Lquidity Analysis ;

Current Ratio = Current Assets / Current Liabilities

Liquid Ratios = (Cash and cash equivalents + short term investments + Accounts recievables)/ Current Liabilities

Company current ansd liquid ratio has detoriated from 2015 to 2016 but is still in good condition as both these ratios are more than one in every case which shows the compnay s able to cover its current obligations using its current assets.

Solvency ratios ;

Debt to Equity Ratio = (Short term debt + Long term debt) / Total Equity

DEbt ratio = Total Assets / (Short term debt + Long term debt)

Company's solvency ratios are also representing its good pictureas the debt finaning is almost half as compared to its Equity and it covering its almost 3.5 tomes from its assets. The company's balance sheet is strong.

2016 2015 Current ratio =6506393/2389966 = 2.72x =5854405/1385173 = 4.23x Liquid ratio =(2045961+150000+1631676)/2389966 = 1.60x =(1939469+100000+1383823)/1385173 = 2.47x

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