Liquidity Of A Company

2. Liquidity proportions Liquidity ratio refers to ratios which related to cash slue in an organization and the ability to remuneration liabilities when its remiss (Wood and Sangster, 2005.) Generally, the first concern of the financial analyst is liquidity: Is the confederacy able to meet its maturing obligations? IJM has watercourse debts RM 1,692,198 that must be paid within the coming year. The oc period ratio is the most unremarkably utilize measure of short-term solvency, since it indicates the extent to which the claims of short-term creditors argon cover by accredited assets that ar expected to be born-again to cash in a period close to similar to the maturity of the claim. Since original assets are near maturing, it is exceedingly in all probability that they could be liquidated at closed to book valuate compulsive ratio According to Elliott and Elliot (2007), when the on-line(prenominal) assets value exceed the value of current liabilities, on that pointfore the current ratio value is great than unity. IJM twelvemonth2007(%)2006(%)2005(%)2003Total changes 2003-2007 (%) c) Liquidity ratios flow rate ratio = current assets/ current liabilities1.86-13.12.13722.281.75344.61.21153.

78 IJMCompetitor 1Competitor 2 YTLWCT Year20062005(%)20062005(%)20062005% c) Liquidity ratios Current ratio = current assets/ current liabilities2.13791.75322.282.33281.764732.191.3291.51-11.98 . The calculation of the current ratio for IJM showing that there is the most increase current ratios at 2.137 in 2006 compared to the some other years. It shows in the group that the bon tons ability to take o! ver off short-term obligation without relying on the sale of inventories which are typically not liquid of the participations current assets. Its compared the current ratio in year 2006, the current ratio in 2003 shows that the companys ability to pay off short-term obligation without relying on the sale of inventories which are typically is more liquid of the companys current assets. The...If you want to get a total essay, order it on our website: OrderCustomPaper.com

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