How to assess cashflow n liquidity

Question

Accepted Answer

Assessing cashflow and liquidity involves analyzing financial statements and ratios to determine the ability of a company to meet its financial obligations.

Reviewing cash flow statements to determine the inflow and outflow of cash
Analyzing liquidity ratios such as current ratio and quick ratio
Assessing the company's ability to generate cash through operations
Evaluating the company's debt-to-equity ratio and debt service coverage ratio
Considering external factors such as economic conditions and industry trends
Example: A company with a high current ratio and positive cash flow from operations is likely to have strong liquidity and cash flow.
Example: A company with a high debt-to-equity ratio and low debt service coverage ratio may struggle to meet its financial obligations.

Accepted Answer

Calculate cash flow
Subtract current liabilities from current assets to calculate cash flow. 
Calculate ratios
Use the cash flow figure to calculate ratios that provide more insight into the company's cash flow, such as operating cash flow ratio, cash flow to debt ratio, and current ratio. 
Analyze cash flow statement
Use a cash flow statement to identify areas where the company generates or uses cash.

Accepted Answer

Cash flow frees buket

How to assess cashflow n liquidity

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