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Topic: Alibaba Group Holding Financials Reflection
Find current ratio, quick ratio, total asset turnover, and inventory turnover for alibaba over 5 years, compare with industry e-commerceand write-up ciriital reflection
Alibaba Group serves as a holding company and operates online retail and wholesale trade. The company also offers cloud computing services among other online services (Yahoo Finance 1).
Reflection on Current Ratio
The current ratio for Alibaba has been very volatile in the past 5 years. In the year 2010, the company recorded a current ratio of 2.69 while the industry e-commerce had a current ratio of 1.97. In the year 2011, 2012, 2013 and 2014 the company recorded a current ratio of 1.81, 1.68, 6.93 and 22.19 respectively. The e-commerce industry average current ratio for the years 2011, 2012, 2013 and 2014 was 1.50, 1.20, 1.10, and 1.10 respectively (Bloomberg 1). From the highlighted ratios, it is visible that Alibaba’s current ratios are higher than the e-commerce industry ratios. This means that most firms operating in the industry have got a higher ability to meet their bills than Alibaba. From the ratios, it is visible that Alibaba has got high liquidity but has got slow cash generation especially in the year 2013 and 2014 as characterized by the ratios.
Reflection on Quick Ratio
The quick ratios for Alibaba in the last 5 years have depicted a variable trend. The company’s quick ratios for 2010, 2011, 2012, 2013 and 2014 are 2.61, 1.69, 1.40, 5.05 and 2.95 respectively. On the other hand, the e-commerce industry quick ratios are 1.29, 0.69, 0.41, 0.48 and 0.26 for years 2010, 2011, 2012, 2013 and 2014 respectively (Yahoo Finance 1). It is visible that Alibaba’s quick ratios are higher than those of the e-commerce industry. This shows that the company has got a higher ability to meet its short-term debt than the e-commerce industry. The ratios also signify that the company’s current has got high liquidity than e-commerce industry. High quick ratio is however not favorable such as the year 2013 where the inventory accounted for 5.05 of the company’s current assets since it may affect the company to meet current financial obligations (Graham 56).