Accounting Information in Decision Making

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FINANCIAL ANALYSIS OF HUBSPOT INC Name Course Institution Liquidity ratios The liquidity ratios refer to a list of ratios that seek to evaluate the ability of the company to meet the current liabilities and other current needs that may fall in the short run with ease as and when they fall due (Thuram, 2007). This ratio’s include the current ratio, quick ratio (acid test ratio), receivables turnover ratio and the inventory turnover ratio. The current ratio of Hubspot Inc. for the year 2016 is 1.38 whereas the quick ratio is 1.20. The current ratio shows that the company’s liquidity is above the recommended level of 1 can be interpreted that the company is able to meet its current liabilities using current assets (which includes inventory) with required ease. The quick ratio also affirms the company’s ability to meet the current needs that arise using current assets excluding inventory. The company’s receivables turnover ratio was 8.45 which means that the company turned accounts receivable into cash 8.45 times for the 12 months that it operated. This also means that the company’s accounts receivable were collected in an average of 43 days in the whole year that the company operated (365 days /8.45 = 43.19 days). The inventory turnover ratio that measures the number of times the company is able to convert its inventory into revenue (Kimmel et al., 2009) cannot be computed as the company did not have any inventory for the period ended 31st December 2016. Profitability Ratios Profitability ratios are ratios used to evaluate the profitability of a company. These include the Asset turnover, Profit margin, Return on assets and the Return on common

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