Liquidity ratios are used to measure an entity’s ability to fulfill its financial obligations in the short-term, i.e. they are measures of a firm’s liquidity. In layman terms, this translates into ready cash or instruments that can realize cash readily. Short-term here refers to a period of 12 months or less. Two of the most important liquidity ratios are the Current Ratio and the Quick Ratio. The latter, by definition, is a more stringent measure of liquidity as it omits outs any element out of the current assets and current liabilities with the slightest of illiquidity. Like Current Ratio, Quick Ratio is also a Balance Sheet analysis tool.
Saturday, January 29, 2011
Wednesday, January 26, 2011
You must have come across the term GDP growth as a barometer for economic growth of a nation. In layman terms, the higher this rate, the better the economy is believed to be performing and vice-versa. But, what is GDP? Gross Domestic Product, or GDP, is defined as all final goods and services produced in an economy in a year, measured at market prices. Here, it is significant to note that this is a country-level measure and only the production within a nation’s political boundaries is taken into account.
U.S. based manufacturer of advanced process control metrology systems, Nanometrics Inc. (NASDAQ: NANO) is among those small stocks that generate much investor interest. On January 14, 2010, NANO made an impressive rally, gaining almost 30% to reach $17.96, by the end of day’s trading. Volumes also moved to over 5 million.
Monday, January 3, 2011
Liquidity ratios are used to measure an entity’s ability to fulfill its financial obligations in the short-term, i.e. they are measures of a firm’s liquidity. Short-term here refers to a period of 12 months or less. Two of the most important liquidity ratios are the Current Ratio and the Quick Ratio. The formula for Current Ratio, or Working Capital Ratio, is:
Current Ratio = Current Assets/Current Liabilities
Saturday, January 1, 2011
There was a time when Spain was the fifth largest economy in the European region, growing on the back of its enormous real estate sector. At that time, about 16% of Spain's GDP came from its construction activities. The profit margins were very promising and attracted a lot of activity, which over time became over activity, particularly in the housing sector. This built up an excess inventory of nearly 30%! Approximating to the timing of the U.S. subprime crisis, as the Spanish real estate bubble went bust the common masses began taking the hit. The burgeoning sovereign debt shook the financial foundation of the State, threatening its solvency. As the Government went into the damage control mode, some of the toughest measures, that further impacted the already suffering masses, followed.