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Date Submitted: 08/01/2011 03:24 AM
4.1.3. Cash Ratio
The cash ratio is estimate to current liabilities into cash. It betoken the company can pay
off it current liabilities given year from its operation.(Kieso, Weygandt,Warfield ,2001).It
is the most famous ratio for realize the liquidity position of any company. Generally we
know that current ratio and quick ratio is not good way to analysis the liquidity position
for a company because it correspond of account receivable and inventory, which take
time to convert to cash..Finally we can express that the cash ratio gives a better result.
The formula of current ratio is below as;
Cash Ratio = Cash / Current Liabilities
(1) (2)
Table: 4.1.3 Cash ratio
Year Beximco Pharmaceuticals Ltd
Square Pharmaceuticals Ltd.
(Ratio)
(Ratio)
2008 (1)
73,647,728
------------------ = 0.028
2,602,032,267
205,295,694
------------------- = 0.058
3,500,845,103
(2)
2007 (1)
85,698,910
------------------- = 0.052
1,627,972,936
139,855,179
------------------ = 0.054
2,555,566,286
(2)
Analysis: In this r atio, we can analysis that the ratio has decrease few times in Beximco
pharmaceutical company in year 2007 to 2008.On contrast; square pharmaceutical
company has increased f ew. For this reason both companies are holding its cash, which is
not good from investor points of view. Current liabilities have increase for both
companies. So those companies need increase invest, that s way both company to get
money for good return.
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4.2. Asset management ratio
Asset management ratios are most notable ratio of the financial ratios analysis. It measure...