... debts to stay in business. In order the assess the liquidity of Longway I made use of the "acid test" shows that the liquidity in 2001 was 1.0:1 times then it increased to 1.19:1 times in 2002. This shows that the longway can repay its short-term obligations. It shows also shows that liquidity is increasing. A company could actually survive on 1.0. The current ratio also shows that the company is in a safe position with regards to liquidity. Profitability ratios (appendix) The profitability of longway has shown significant decreases between 2001-2002. For instance Return on investment has dropped from 32.8% in 2001 to 11.5% in 2002. Also Net profit has dropped from 23% in 2001 to 8.3% in 2002, similarly has gross profit. Return on equity has more than halved in the same period this doesn't show maximisation of profit or maximisation of sales therefore stability looks poor. Efficiency ...

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