LIQUIDITY RATIOS measure the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash. Short-term creditors such as bankers and suppliers are particularly interested…
Liquidity Risk: probability of loss arising from a situation where there will not be enough cash or cash equivalents to meet debts; sale of illiquid assets will yield less than their fair value.…
Purchased (borrowed) liquidity is when the financial institution borrows money in the money market to meet their liquidity needs.…
Liquidity ratios: Measures the ability of a company to pay its debts (liabilities) in the short-term and its ability to generate cash when needed during the current fiscal year. Creditors and suppliers are especially interested in the liquidity of the company. Examples of liquidity ratio analysis include:…
Liquidity Ratios: Show the company’s ability to pay of its current liabilities from its current assets.…
2. Economists use two principle interest rates: nominal and real. The purpose of this distinction is to…
Liquidity: Concerned with the financial stability of a business, often in the short-term (Chapman, 2006)…
1. Liquidity ratios are a class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.…
ability to meet its short-term obligations with its most liquid assets. For this reason, the ratio…
Real variable, such as the real interest rate, is one where the effects of inflation have been…
4. 5-year Treasury bonds yield 5.5%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year bonds is 0.4%. What is the real risk-free rate, r*?…
A company’s past performance is a good indicator of its future outlook. Investors give proper attention to different ratios. In this report I am analyzing the financial position and financial performance of AT & T to conclude whether it is better to invest in the company or not.…
Liquidity ratios, like the current ratio, provide information about a firm's ability to meet its short time financial obligations. Short-term creditors seek a high current ratio from prospective clients since it reduces their risk. For investors in a company, such as shareholders, a lower ratio is sought, so that more of a firm's assets are working to grow the business. When computing financial relationships, a good indication of the company's financial strengths and weaknesses becomes clear. Examining these ratios over time provides insight as to how effectively the business is being operated. The general consensus on liquidity ratios is; the higher the better, especially if a firm is reliant on any significant extent on creditors to finance their assets.…
1. The risk-free rate of interest, in this case, the yield of the ten-year government bond, which is 6%.…
1.0 LIQUIDITY RATIO: This measures the firm’s ability to pay its bills or debt over the short-run without undue stress.…