LIQUIDITY RATIO
LIQUIDITY
Liquidity ratios are used to determine a company’s ability to meet its short-term debt obligations. Investors often take a close look at liquidity ratios when performing fundamental analysis on a firm. Since a company that is consistently having trouble meeting its short-term debt is at a higher risk of bankruptcy, liquidity ratios are a good measure of whether a company will be able to comfortably continue as a going concern.
Working Capital
Working capital is the amount by which the value of a company's current assets exceeds its current liabilities. Also called net working capital. Sometimes the term "working capital" is used as synonym for "current assets" but more frequently as "net working capital", i.e. the amount of current assets that is in excess of current liabilities. Working capital is frequently used to measure a firm's ability to meet current obligations. It measures how much in liquid assets a company has available to build its business.
Working capital is a common measure of a company's liquidity, efficiency, and overall health.
Decisions relating to working capital and short term financing are referred to as working capital management. These involve managing the relationship between an entity's short-term assets (inventories, accounts receivable, cash) and its short-term liabilities.
Working capital (net working capital) = Current Assets - Current Liabilities
2008
2009
2010
2011
2012
Current assets
238,908
211,700
225,985
293,804
326,215
(-) Current liabilities
93,606
59,325
73,192
125,668
106,557
Working capital
145,302
152,375
152,793
168,136
219,658
Current Ratio
As stated earlier, liquidity ratios measure a company’s ability to pay off its short-term debt using assets that can be easily liquidated. In this case, the current ratio measures a company’s current assets against its current liabilities. Generally, higher numbers are better, implying that the firm has a higher amount of
Liquidity ratios are used to determine a company’s ability to meet its short-term debt obligations. Investors often take a close look at liquidity ratios when performing fundamental analysis on a firm. Since a company that is consistently having trouble meeting its short-term debt is at a higher risk of bankruptcy, liquidity ratios are a good measure of whether a company will be able to comfortably continue as a going concern.
Working Capital
Working capital is the amount by which the value of a company's current assets exceeds its current liabilities. Also called net working capital. Sometimes the term "working capital" is used as synonym for "current assets" but more frequently as "net working capital", i.e. the amount of current assets that is in excess of current liabilities. Working capital is frequently used to measure a firm's ability to meet current obligations. It measures how much in liquid assets a company has available to build its business.
Working capital is a common measure of a company's liquidity, efficiency, and overall health.
Decisions relating to working capital and short term financing are referred to as working capital management. These involve managing the relationship between an entity's short-term assets (inventories, accounts receivable, cash) and its short-term liabilities.
Working capital (net working capital) = Current Assets - Current Liabilities
2008
2009
2010
2011
2012
Current assets
238,908
211,700
225,985
293,804
326,215
(-) Current liabilities
93,606
59,325
73,192
125,668
106,557
Working capital
145,302
152,375
152,793
168,136
219,658
Current Ratio
As stated earlier, liquidity ratios measure a company’s ability to pay off its short-term debt using assets that can be easily liquidated. In this case, the current ratio measures a company’s current assets against its current liabilities. Generally, higher numbers are better, implying that the firm has a higher amount of