Suppose that you have 1.5 million rupees to invest in the stock market. Given that people will always have to eat, you have decided to look for investment opportunities in Pakistan Petroleum Ltd.(PPL)and attock refinery Ltd.(ATORL). Your analysis of each company's financial statements reveales that both have negative working capital,and both have current ratio of less than 1 to 1. Based on your findings, should you be concerned about the short-term liquidity of these two company? Explain.
Suppose that you have 1.5 million rupees to invest in the stock market. Given that people will always have to eat, you have decided to look for investment opportunities in Pakistan Petroleum Ltd.(PPL)and attock refinery Ltd.(ATORL). Your analysis of each company's financial statements reveales that both have negative working capital,and both have current ratio of less than 1 to 1. Based on your findings, should you be concerned about the short-term liquidity of these two company? Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Suppose that you have 1.5 million rupees to invest in the stock market. Given that people will always have to eat, you have decided to look for investment opportunities in Pakistan Petroleum Ltd.(PPL)and attock refinery Ltd.(ATORL). Your analysis of each company's financial statements reveales that both have negative working capital ,and both have current ratio of less than 1 to 1. Based on your findings, should you be concerned about the short-term liquidity of these two company?
Explain.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education