Assignment
Please answer two questions below.
What is liquidity analysis? Why the analysis is important? Show one or two examples to illustrate why liquidity ratios are important.
What is operating cycle? Are operating cycles same for all industries? Give a couple of examples to elaborate your points.
What are the differences between cash and marketable securities? Why companies invest in marketable securities, rather than hold cashes?
What is accounting receivable? What do receivable related ratios reveal? Give a few examples to demonstrate your points.
How to evaluate inventories? Why do we have different cost flow assumptions related to inventories? What are the ratios that are linked to inventories?
What is working capital? Validate with examples how to calculate the working capital, and its importance to measure liquidity of companies.
What are current ratio and acid-test ratio? Corroborate with examples how these two are different from or similar with each other.