Course: Understanding Company Financial Statements: Assessment of Financial Performance
Code: LP03_C16
Duration: 2 hour
CPD Credit: 2 CPD Points
This Course aims to introduce you to the basic analysis of short-term liquidity and long-term solvency. Short-term liquidity looks at a company's capability to meet its immediate cash flow requirements while long-term solvency looks at a company's capability to service more long-term needs. This Course consists of two [2] Lessons:
In the first Lesson you will learn: That short-term liquid assets are simply current assets and that these are managed by the company to meet the cash inflow and cash outflow of the company. There are four basic measures of short-term liquidity - the current ratio, quick ratio, cash ratio, and defensive interval. You will also learn the accounting tricks employed by management to make short-term liquidity appear better than it actually is.
In the second Lesson you will learn: What long-term solvency is and ways to evaluate a company's long-term solvency through financial ratios. There are several ratios that can be used to evaluate long-term solvency such as gearing and interest coverage ratio. You will also learn accounting techniques to improve a company's long-term solvency picture through the use of off balance sheet activities.
Janet Taylor
Janet Taylor is a Chartered Accountant with MacIntyre Hudson, England, a highly experienced accountancy practitioner specializing in solicitors' accounts.
Eileen Chan
Eileen Chan trained as a Chartered Accountant in Australia and she now specialises in Auditing and Financial Reporting. Previously, Eileen was a general manager in a Professional Accountancy training centre where she gained extensive experience lecturing ACCA students. She is now a director of Horwath Hong Kong CPA Limited.
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