- March 17, 2020 at 11:08 am #565341SaimonParticipant
- Topics: 123
- Replies: 55
can you give me answer for following case
“Company is giving 85% credit facility to its customer and for production it is relying on short term loan which is very significant.
acid test and current ratio and it doesn’t show any thing alarming that we can say company will face liquidity crisis
i m concerned and feeling they might face problem (Liquidity crisis in future) as
– there short term loan increased 3 times in 3 year
– there sales are falling slowly and will fall dramatically in future if we consider product life cycle
– inventory are increasing
– but they currently breaks even with collection from customer and cash reserved and all payment”
So how can I show or prove the liquidity crisis that company will face in near future but not now????
“Proving is compulsory”March 17, 2020 at 5:55 pm #565358John MoffatKeymaster
- Topics: 56
- Replies: 53338
I don’t think you can be referring to a Paper AFM exam question, because the exam questions would never say ‘proving is compulsory’!!
It is impossible to actually ‘prove’ anything but all I can suggest is that you do forecasts for the next free years.
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