liquidity, but does not have good effects sometimes as cash is a non-risky asset. It is also uneconomical - opportunity cost. So cash ratio is managed adequately.
※Caution
It is very sensitive to small events. If account receivable is lager, then cash ratio is volatile. So it often cannot show anything.
1.2. Current Ratio
The current ratio measures the cushion of working capita
has showed its strong performances until global economy downturn
Under-performance of the firm in the first quarter
Poor liquidity
Instability of import and export
Despite the downturn, the firm’s ship building business is still outstanding
Majority of the firm’s profit is from the ship building business
Increase of average ship selling price
Reduction of cost of steel plate
liquidity is the highest. Also, debt ratio shows that long-term solvency is also the highest. SK telecom earns rates of return above the floor, so it has a competitive advantage. Rate of return on equity proves that SK telecom used capital provided by common shareholders effectively.
Comparing them, we could conclude that liquidity of SK telecom was the highest
Liquidity Ratio
# Why are these ratios important?
Liquidity is an important factor that investors use to gauge the overall health of a company. A strong cash position usually means debt is under control and any short-term liabilities can be paid off quickly in hard economic times. High liquidity ratio is also a sign that the company is generating sales and managing expenses, based on the size
liquidates its assets. In this case, since the it is upward revaluation and it is not based on historical cost, it is against the conservative valuation.
(2) Changes in Accounting policy of equipments and supplies
Changes in accounting policy concerned with equipments and supplies are mentioned in quarter report. NHN applied 5 service years on equipments and supplies up until 2006