Question: Certain industries are subject to peculiar financing and operating conditions
Certain industries are subject to peculiar financing and operating conditions calling for special consideration in drawing distinctions between current and noncurrent. How should analysis recognize this in evaluating short-term liquidity?
Answer to relevant QuestionsYour analysis of two companies reveals identical levels of working capital. Are you confident in concluding their liquidity positions are equivalent?Assume a company’s days’ sales in receivables is 60 days, compared to 40 days for the prior period. Identify at least three possible reasons for this change.Identify important qualitative considerations in the analysis of a company's liquidity. What SEC disclosures help our analysis in this area? When is information on unconsolidated subsidiaries important to solvency analysis? A company you are analyzing has a purchase commitment of raw materials under a noncancelable contract that is substantial in amount. Under what conditions do you include this purchase commitment in computing fixed charges?
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