Bankruptcy Predictor Model Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Bankruptcy Predictor Model

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Paul Berliner who wrote (35)	3/15/1999 4:02:00 PM
From: Razorbak	Read Replies (1) of 477

Working Capital Ratio <<The working capital ratio is meaningless because it includes inventory, which a company on the verge of bankruptcy is likely to be having trouble managing - the better ratio is the 'quick ratio.'>> Paul: Companies that are having trouble paying their vendors often do not have very high inventories, because this takes either cash to pay for manufacturing payroll and direct materials purchases or trade credit, which may be very limited due to prior payment problems. Plus at the end of the day, if cash gets tight, inventories can be partially or fully liquidated to produce cash, albeit usually at a discount. Hence the working capital ratio may still be meaningful, even though it may not be quite as telling as the quick ratio at a given snapshot in time. Nevertheless, I think it is erroneous to argue that the working capital ratio is meaningless. Razor

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next