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ACCT 2101 PROJECT

Introduction

Lindsay Corporation is a public company located in Omaha, Nebraska United States. The company was founded in 1950 by Paul Zimmerer. Lindsay Corp provides road infrastructure services and water management products and services. The company is divided into two departments. The first department deals with infrastructure and the second department focuses on irrigation. The irrigation department deals with manufacture and marketing of hose reel irrigation systems, center pivot and lateral move. These equipment are used in the agricultural industry. The infrastructure department deals with the manufacture and marketing of special barriers, movable barriers, end terminals, road markings, road safety equipment and crash cushions.

Financial Ratios

Current Ratio

Current Ratio=Total current assets/ Total current liabilities

Current Ratio=313.49M/82.13M

Current Ratio=3.817

Interpretation- This tells the owners of Lindsay Corporation that current liabilities are covered by current assets 3.817 times. This means that the business has enough current assets to meet the payment schedule of current liabilities with a margin of safety.

Working Capital Ratio

Working Capital=Total Current Assets-Total Current Liabilities

Working Capital=313.49M-82.13M

Working Capital=231.36m

Interpretation- This means that Lindsay Corp has $231.36M in working capital. This is good for the company since the working capital is a positive figure. It means the company has the ability to weather hard times.

Inventory Turnover Ratio

Inventory Turnover Ratio=Cost of Goods Sold/Total Inventory

Inventory Turnover Ratio=329.46M/92.29M

Inventory Turnover Ratio=3.56

Interpretation= this means that Lindsay Corp had an inventory turnover of 3.56. That is to say that during the financial period, the inventory was converted to sales 3.56 times

Conclusion

Based on the results from the above three financial ratios I would invest in Lindsay Corporation. Looking at the current ratio, the company has enough current assets to meet the payment schedule of current liabilities with a margin of safety. Using the working capital ratio I would invest in the company since the working capital is positive which means that the company is operating within safety margins. The inventory turnover of the company is also good considering that it is dealing with the sale of imperishable goods and services. A turnover of 3.56 is impressive.