This ratio is also used by creditors to evaluate a company’s’ ability to payback debts or loans. If their ratio is low they are less likely to receive a loan, due to the fact that they have more expenses then they do resources coming in. Selected industry ratios indicate that most companies increase their current or liquidity ratio at an average rate of . 22 times per year. Lamar Swimwear’s current ratio is at a rapid decline of an average of . 35 times per year, thus making Lamar Swimwear a company that would need a lot of improvement to become a worthwhile investment.
In conclusion, reviewing all of the data that was analyzed throughout this paper it is easy to conclude that with the declining ratios of profitability, assets and resource efficiency Lamar Swimwear would not be the best company to make an investment in. In order for the company to be a wise investment choice there will need to be an increase in sales to cover the rising cost of goods. If the market rates go down by even half of the first year increase, which would be $120,000, Lamar Swimwear would be in a much better position to raise their ratios and become a contender in a thriving industry.
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My suggestions for Lamar Swimwear would be to increase the price in which they are selling their products or find a more cost effective manufacture. With these changes they can increase their profitability while cutting down the amount of money they are paying for the production of their product. While Lamar Swimwear started off as a thriving company within its industry, the ability to keep up with the changes of the economy and industry changes has proven to be more than the company can handle.