Financial Analysis of Georgia Power Term Paper

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61). ("Quick Ratio,"2010) ("Georgia Power," 2010) the greater the number the better the short-term liquidity position the company is in. In this particular situation while Georgia Power is not facing a liquidity crisis, their level of short-term liquidity is lower than it should be.

Analysis

When you put all of the different pieces together, it is clear that there they are saying that Georgia Power is good long-term investment. This can be seen by the 4.7% return on equity that they are delivering to shareholders. The total amounts of debt are reasonable with the company having a total debt ratio of .654. This is below the number of 1.0, which indicates that the company has more than enough assets to cover any kind of liabilities. However, when you look a little further, the short-term indicators such as: the quick ratio; shows a different picture. In this particular aspect there was a reading of .61. What makes this number so troubling is the fact that it is below 1.0, indicating that the company's short-term liquidity position is its greatest weakness. Yet, when you place the current number into context, while it may be low it is not enough to force any kind of liquidity crisis for the company over the next few months. Together, all of these different indicators tell investors that Georgia Power is a good long-term investment. However, there will be some short-term challenges that the company is going through because of the lower short-term liquidity position.

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Beyond this factor, the company has all signs that it will continue to provide investors with consistent growth and income.

Clearly, Georgia Power is a good long-term investment. This is because of: the return on equity, the total debt ratio and the quick ratio. The reason why this is important is: due to the fact that many companies have been facing liquidity issues, over the last two years. To determine if Georgia Power is facing such a fate requires that you examine these different variables. After doing a careful analysis, the reason why Georgia Power is a long-term buy is because of: the 4.7% return on equity, the total debt ratio of .654 and the quick ratio of .61. The quick ratio indicates that the company is facing some short-term challenges. However, when you consider the fact that the company produces and sells electricity, means that demand will continue to remain the same regardless of what is taking place in the economy. This fact, along with the positive return that they continue to provide investors during the recession and the low debt position, will continue to provide consistent long-term growth. It is through examining the financial strength of Georgia Power in this light; that will help you to see what opportunities and challenges could be faced by the company in the future......

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