A liquidity ratio measures companies' ability to meet short-term financial obligations and that used to determine a debtor's ability to pay off obligations without increasing external capital. Apart from that, high liquidity indicates company easily meets short-term debt obligations while low liquidity describes the opposite or a company can face bankruptcy (Eccles and Klimenko, 2019). A debtor's capacity to settle debts without raising external capital is determined by its ability to satisfy short-term financial obligations, which is measured by a liquidity ratio. In addition, a company with strong liquidity is likely to be able to pay its short-term debt commitments without difficulty, whereas one with low liquidity may be in danger of going bankrupt. Additionally, a firm with great liquidity is more likely to be able to pay its short-term debt obligations on time, whereas one with little liquidity may be in danger of failing.
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Increasing the liquidity ratio quickly improves companies' ability and that is basically used to calculate convertible cash to compare current assets. In the financial year 2019, the quick ratio is 1.09 while the industry average is 1.05. The current ratio is 1.41 and 1.49 while the industry average is 1.31% respectively. In addition, a company with strong liquidity is likely to be able to pay its short-term debt commitments without difficulty, whereas one with low liquidity may be in danger of going bankrupt. The quick ratio for the 2019 fiscal year is 1.09, while the industry averages are 1.05 and 1.31%, and the corresponding current ratios are 1.41 and 1.49. The CEO of Burrito and Quesadilla Inc. uses the liquidity ratio to determine the company's capacity to pay short-term debt commitments. In essence, the liquidity ratio compares current assets by computing convertible cash.
The ability of a debtor to meet short-term financial obligations, which is gauged by a liquidity ratio, determines its ability to pay off debts without rising outside cash. As per the narration and explanation of Nguyen and Nguyen, (2020), the ability of businesses is swiftly improved by raising the liquidity ratio, which is essentially used to compute convertible cash to compare current assets. The quick ratio is 1.09 in the 2019 fiscal year, while the industry average is 1.05 while the industry average is 1.31%; the current ratios are 1.41 and 1.49, respectively. The CEO of Burrito and Quesadilla Inc identify the ability to meet short tem debt obligations by liquidity ratio.
The higher liquidity of an organization is largely due to increasing current assets such as account receivables, short-term marketable securities as well as cash. Additionally, liquid assets are used to calculate the quick ratio and liquidity ratio of the business organization and that practically finds out the liquid assets and capital which is convertible to cash as compared to the current assets in a financial year (Ding et al. 2021). Additionally, sometimes liquid assets describe separately in a financial statement and that includes invented recent prepaid expenses at the same time. In essence, the liquidity ratio computes convertible cash to compare current assets. In the 2019 fiscal year, the quick ratio is 1.09, whereas the industry average is 1.05 and the industry average is 1.31%; the respective current ratios are 1.41 and 1.49.
However, in this common situation, a very high liquidity ratio indicates the company is to focus on efficiency and utilize capital to grow or expand the overall business process. However, a company's liquidity ratio has measured the ability to pay off short-term debt obligations of the business by using its current assets. In order to individual companies trying to increase their ability by cutting overhead expenses as well as business liabilities and trying to improve very high liquidity which is necessary for good things (Giese et al. 2019). In order to minimize the short-term day publications by using current assets the company indicates a better position to meet the day publications and continuously improve their efficiency. The quick ratio is 1.09 in the 2019 fiscal year, while the industry average is 1.05 while the industry average is 1.31%, the current ratios are 1.41 and 1.49, respectively.
b) Asset management of the firm
Asset management determines the process of maintaining developing operating and selling assets with a help of a cost-effective manner. As per the study of Galaz et al. (2018), most firms a trying to manage their assets on behalf of their individual financial entities which are continuously tracked by the company. In order to provide optimal returns for the business asset management techniques considered current assets and fixed assets of the business and refers them to required for long-term use. Most businesses attempt to manage their assets on behalf of the various financial organizations that they are regularly monitoring. Additionally, a company with great liquidity is more likely to be able to pay its short-term debt obligations on time, whereas one with little liquidity may be in danger of failing.
Helps to identify and manage risk
Additionally, involving a risk-based approach in business asset management techniques is considered crucial that efficiently improving operation and performance by minimizing asset life cycle cost. In order to asset management ensure the financial statement and helps to identify file and manage long-term business risk and effectively compass the arriving risk in the future.
Complete asset inventory
In order to individual aspects such as total assets count the value of each asset is efficiently monitored by the asset management techniques that extract all the information about the asset to the inventory. In order to after computing the life cycle cost of the individual assets specific approaches state levels of service to identify the capacity and overall quality of the different assets (Kecskés and Mansi, 2018). Sometimes acid renewal activities also maintain by asset management techniques and that exercise long-term financial planning.
Long-term financial planning
Apart from that asset management techniques are also considered an important approach and include some global surveys to identify the overall maturity based on asset-intensive planning. An individual organization trying to strive for their asset performance by using asset management techniques and sometimes regulator and safety policies are also required which is to make strong business performance by removing external threats. As per the explanation of Sunardi et al. (2020), the risk-based approach can easily be manageable by asset management techniques and that easy identity the risk of the individual firm which is need to be identified by the individual surveyor. Additionally maximizing the overall wealth of the business firm is incorporated with the specific approach and that creates a particular benchmark that provides basic ideas to optimize asset performance.
Accurate optimization rate
Asset optimization rate improvement is depending on asset management techniques and provides a holistic adjustment to improve the asset performance rate. Additionally, S8 management software performance is always important to track efficiently individual components of the business that do not need any expertise to maintain the specific approach. Specific methodologies specify levels of service to identify the capacity and overall quality of the various assets after estimating the life cycle costs of the individual assets.
References
Ding, W., Levine, R., Lin, C. and Xie, W., 2021. Corporate immunity to the COVID-19 pandemic. Journal of Financial Economics, 141(2), pp.802-830.
Eccles, R.G. and Klimenko, S., 2019. The investor revolution. Harvard Business Review, 97(3), pp.106-116.
Galaz, V., Crona, B., Dauriach, A., Scholtens, B. and Steffen, W., 2018. Finance and the Earth system–Exploring the links between financial actors and non-linear changes in the climate system. Global Environmental Change, 53, pp.296-302.
Giese, G., Lee, L.E., Melas, D., Nagy, Z. and Nishikawa, L., 2019. Foundations of ESG investing: How ESG affects equity valuation, risk, and performance. The Journal of Portfolio Management, 45(5), pp.69-83.
Kecskés, A. and Mansi, S., 2018. Do long-term investors improve corporate decision making?. Journal of Corporate Finance, 50, pp.424-452.
Nguyen, H.T. and Nguyen, A.H., 2020. The impact of capital structure on firm performance: Evidence from Vietnam. The Journal of Asian Finance, Economics and Business, 7(4), pp.97-105.
Sunardi, N., Husain, T. and Kadim, A., 2020. Determinants of Debt Policy and Company’s Performance. International Journal of Economics and Business Administration, 8(4), pp.204-213.
