Current ratio of Leaf Group Ltd.
The current ratio is an indication of a company's liquidity and measures the capability to meet a company's short-term obligations. It compares a firm's current assets to its current liabilities, and is expressed as current assets divided by current liabilities. The ratio is only useful when two companies are compared within industry because inter industry business operations differ substantially. To determine liquidity, the current ratio is not as helpful as the quick ratio, because it includes all those assets that may not be easily liquidated, like prepaid expenses and inventory.
Acceptable current ratios vary from industry to industry. In many cases an investor would consider a high current ratio to be better than a low current ratio, because a high current ratio indicates that the company is more likely to pay the investor back. Large current ratios are not always a good sign for investors. If the company's current ratio is too high it may indicate that the company is not efficiently using its current assets or its short-term financing facilities. If current liabilities exceed current assets the current ratio will be less than 1. A current ratio of less than 1 indicates that the company may have problems meeting its short-term obligations.
Some types of businesses can operate with a current ratio of less than one however. If inventory turns into cash much more rapidly than the accounts payable become due, then the firm's current ratio can comfortably remain less than one. Inventory is valued at the cost of acquiring it and the firm intends to sell the inventory for more than this cost. The sale will therefore generate substantially more cash than the value of inventory on the balance sheet. Low current ratios can also be justified for businesses that can collect cash from customers long before they need to pay their suppliers.
Leaf Group Ltd., together with its subsidiaries, operates as a diversified Internet company worldwide. The company builds platforms across its marketplace and media properties to enable community of creators to reach audiences of various lifestyle categories. Its marketplaces service offering operates Society6.com, which provides artists with an online commerce platform to feature and sell their original designs on art prints and other products in the home décor, accessories, and apparel categories; SaatchiArt.com, an online art gallery featuring a selection of original paintings, drawings, sculpture, and photography that provides a global community of artists an environment to exhibit and sell their work directly to consumers worldwide; and The Other Art Fair, an art fair for artists to present and sell their work directly to art buyers. The company's media service offering comprise Cuteness.com, a community for pet owners and animal lovers; Techwalla.com, a site that provides reviews and information on technology products for your home and family; LEAF.tv, a site with content in living, eating, and fashion; Sapling.com, a source for information on personal finance; eHow, a do-it-yourself reference destination that provides practical solutions to fix, build, create, or learn problems of life; and Livestrong.com, a health and healthy living destination with library of health, fitness, lifestyle, and nutrition articles and videos. In addition, Leaf Group, through its content publishing studio, creates content for third-party publishers and brands. The company was formerly known as Demand Media, Inc. and changed its name to Leaf Group Ltd. in November 2016. Leaf Group Ltd. was founded in 2006 and is headquartered in Santa Monica, California.
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