chap011 Credit Analysis(财务报表分析-台湾中兴大学)课件.ppt

11; Company Liquidity refers to the ability to meet short-term obligations Liquidity is the ability to convert assets into cash or to  obtain cash Short term is the longer of one-year or the company operating cycle ; Liquidity is a matter of degree Lack of liquidity can limit Advantages of favorable discounts Profitable opportunities Management actions Coverage of current obligations ; Severe illiquidity often precedes Lower profitability Restricted opportunities Loss of owner control Loss of capital investment Insolvency and bankruptcy ; Current assets are cash and other assets reasonably expected to be (1) realized in cash, or (2) sold or consumed, during the longer of one-year or the company’s operating cycle Current assets include: Cash -- ultimate liquid asset Cash equivalents -- temporary investments of excess cash Marketable securities -- debt or equity securities held as s-t investments Accounts receivable -- mounts due from credit sales Inventories -- items held for sale in the normal course of business Prepaid expenses -- advance payments for services and supplies ; Classification as current asset depends on: 1. Manament’s intent 2. Industry practice Analysis must assess this classification 1. Is classification as current asset appropriate? 2. If not, then adjust accounts and amounts among current and noncurrent ;Classification as current liability depends on: 1. Manament’s intent 2. Industry practice Analysis must assess this classification 1. Is classification as current liability appropriate? 2. If not, then adjust accounts and amounts among current and noncurrent 3. Are current liabilities reported? 4. If not, then adjust accounts for these amounts—potential examples: Contingent liabilities associated with loan guarantees Future minimum rental payments under noncancelable operating leases Progress payments under contracts Current deferred tax liabilities (and assets) ; Working capital is defined as the excess of current as