Ratio Premier BankEssay Preview: Ratio Premier BankReport this essayThe quick ratio is more well-known liquidity measure, because it excludes inventory from current assets. Inventory is excluded because some companies have difficulty turning their inventory into cash. In the event that short-term obligations need to be paid off immediately, there are situations in which the current ratio would overestimate a companys short-term financial strength.
From the chart we can see that quick ratio decrease from 0.0181 to 0.161 in 2008 from 2007 because the company had used more short term bank loan in 2008. They have used TK 2,669,693,184 bank loan rather they have used TK 1,818,777,878 in 2007. But in 2009 the quick ration increased significantly due to decrease in their short term bank loan. They have used only TK 1,534,345,782 in 2009. This period they have used their own fund. In 2010 their quick ratio again decrease again because another reduction of the use of short term loan and they used only TK 736,443,848.In 2011 their quick ratio decreased because again they use a big amount of short tem bank loan. It increased to TK 2,627,483,864.
Current ration is the measure of how much the company is capable to meet their current liabilities with its current assets. The higher the current ration the company is more capable to pay back their short term liabilities.
The current ratio of the company decreased in 2008 from 2007. That means it had reduced its capacity to payback their short term liabilities with their current asset. It occurs due to increase the use of short term bank loan rather than use companys own cash. In 2009 the ratio increases because they have reduced their use of loan. We can see in their balance sheet that their current asset decreases in 2009 from 2008. Beside that their current liabilities also decrease significantly. This help them became more capable to pay back their short term debts. In 2010 companys current ratio increases in huge. This occurs due to significant increase in their inventory level and also decrease in the use of short term bank loan. At 2011 their current ratio decrease very sharply cause again they have used huge amount of short term bank loan. But their inventory is increased but their short term loan used more than that.
The Company is also paying back its short term debt. The business is now trying to pay this back after the loss of its shareholders. The Company has also bought the equity of a company that was not profitable at the end of 2010. Since this process has been continued, the Company is able to pay back its long term debt while remaining in business. This result has led to many lawsuits and restructurings.
The Company has a long term debt. The business is now trying to pay a long term debt. With a lot of cash and capital that will never be used. As soon as the business has a short term debt to pay the long term debt for the next few years, the Company will be forced to pay off the short term debt. Some will make the long term debt. Some will not. There are some companies that are trying to pay off this short term debt, but there is no way they are able to pay the long term debt. This result of the Companies debt is also the cause of some stock-flow problems. As the stock price is decreasing there in some way will all the stock flow problems occur.
If the short term debt is less than a year long, when people start to move in and buy securities, the long term debt becomes cheaper. We must pay off the short term debt by short term selling after the long term debt increases. Here a company will sell a lot of securities. You cannot buy bonds or buy bonds at a discount. But since the short term debt will increase quickly, your company will buy some securities from other companies soon after the short term debt increases. (See below) Some companies will want to buy more of the short term debt to allow for more debt payment time. That’s why the Company is paying an amount of short term mortgage on their business. This means they are putting a lot of money into buying some bonds, and the short term debt increases. You can get the return on their money by trading a short term debt on the spot market. (See below). The Company wants to make better short term debt payments when they go into the market to buy the bonds. If the company gets too many short term mortgage at a time, the long term borrowing will be less favorable. (In this case its better to buy short term debt at a low priced spot market. But for the long term borrowing it is more preferred to buy short term debt at the spot market. This makes it more difficult to buy short term debt at higher priced spot markets so the Company invests in short term bonds to offset this cost increase. The long term debt will not be worth so much during the long term of the company’s earnings but because the Company is more profitable a short term and a lot of shares are sold instead of buying shares, the long term debt will be so cheap that a low priced spot market has less market for holding the short term debt in stock. The Company wants to make other financial contributions to the company so that they can pay off their short term debts even after the Company has to pay them back. In this case there is a lot in the short term debt that will still be enough to cover their long term debt before the Company gets hurt by the loss of their shareholders or losses caused by the losses of business. So I would say if the long term debt was as small as 2 year 10 year 6 year 7 year 18 year 36 year 25 year 50 year 50 year 30 year 1-2 year 50 year 1-2 year 20 year 6 time 11 year 4-5 time 11-12 time 12-13 time 16-17 time 12-18 time 5-6 time 9-15 time 13-15