Сборник бизнес-кейсов алматы, 2015 Выпуск 1
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Figure 1: Current Ratio Theoretically, this short-term coefficient reflects how company's current liabilities are covered by current assets. Using Figure 1, you could draw students' attention to the fact that the ratio shows how much of a company's current debt can be repaid through available cash, future payments from debtors as well as on condition of selling of existing inventories, including finished products and other tangible current assets. In other words, short-term liquidity measures are typically based on “how quickly assets can be converted into cash to settle obligations that are due soon” Excess of current assets over short-term financial liabilities provides a reserve stock to compensate for losses that may be incurred by companies when placing current assets, except cash. The higher the margin, the greater the confidence of creditors that the debts will be paid. Typically, the recommended value, especially by banks, is ≥ 2. To visualize, it would be useful to calculate the company’s assets percentage and changes over the period. CR = Current Assets Current Liabilities = (1.1) Cash and cash equivalents (1.2) Trade and other accounts receivables (1.3) Inventories (1.4) Other current assets (2.1) Short-term financial liabilities (2.2) Trade and other payables (2.3) Liabilities under other mandatory and voluntary payments (2.4) Employee benefit liabilities (2.5) Tax liabilities (2.6) Other current liabilities 73 $000 01/07/12 % 01/07/13 % Changes (4-2) А 1 2 3 4 5 Cash and cash equivalents 9 298 18,37 4 630 7,75 -10,62 Trade and other accounts receivables 16 081 31,77 24 649 41,28 +9,51 Inventories 21 968 43,39 27 283 45,71 +2.32 Other current assets 3 275 6,47 3 141 5,26 -1,21 Total current assets (1) 50 622 100,00 59 703 100,00 - At this point you could ask, “What is the liquidity of each item of current assets?” starting with cash. Guide the students with the following examples: 1. The more cash, the more guarantee of debt repayment. However, there exist no common standards and recommendations for the ideal level to cash a company should hold because a company with even a small sum of cash could always be financially solvent if it is able to balance and synchronize cash inflow and outflow efficiently and on time. 2. If most assets consist of accounts receivable, which is difficult to collect, then it would likely require a higher ratio of assets to liabilities, and vice versa. Students could extend this list. You could conclude the discussion that the single correct value or guideline of Liquidity Ratios (including Current Ratio, Cash Ratio and Quick Ratio) does not exist. In each case, it may be different depending on the company’s financial position and specific external situations. In analysing the company’s financial ratios, it would be useful to establish benchmarks that you could use to compare its relative performance, for example, against its industry or its previous years’ ratios. Here it is relevant to point out that the usual recommended value of CR is greater than 1. Depending on the industry and other business specification, this recommendation may vary. Discuss the other side of a Current Ratio - what kinds of liabilities does a company have to pay? For clarity, students need to compile the similar table on the structure of current liabilities and its changes over the period, by posting information on a separate board, but next to current assets. $000 01/07/12 % 01/07/13 % Changes (4-2) А 1 2 3 4 5 Current portion of long term loans - - 22 172 47,71 +47,71 Short-term loans 14 403 48,25 8 0,02 -48,23 Trade and other payables 13 448 45,06 19 550 42,07 -2,99 Liabilities under other mandatory and voluntary payments 23 0,08 - - Employee benefit liabilities - - 50 0,11 +0,11 Tax liabilities 43 0,14 - - -0,14 Other current liabilities 1 930 6,47 4 693 10,10 +3,63 Total current liabilities (2) 29 847 100,00 46 473 100,00 - Analyzing the table, you could ask the question "What are the two essential changes that took place in 74 the structure of the company’s liabilities over the period?" Students undoubtedly note the following: 1. The appearance of the balance sheet item "current portion of long term loans" which amounted to 47.71%. 2. The emergence of employees’ wage debts. The first element would enable you to ask the following question: "Could the CFO bring long-term sources to meet current liabilities?" and move on to discuss legitimacy of company’s financial policy when it attracts short-term loans for long-term financing of the construction of a new plant. This will begin to acquaint the students with the differences between conservative and aggressive financial policy of a company. жүктеу/скачать 3.48 Mb. Достарыңызбен бөлісу:
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