1. Analyzing Investment Activities
Week 4 – Part 2
Lecture date: 11/10/2016
FINA321 – Fall 2016
Abdullah Al Shukaili

2. Guest Speaker On Thursday; October 13th Topic: The process of Auditing
Please prepare for this discussion

3. Intangible Asset
Intangible assets are rights, privileges, and benefits of ownership or control

6. Liquidity ratio
Ratios: are financial indicators that distill relevant information about business entity, & identify trends that may important to investors, lenders, and other interested parties.
Important to analyze financial statements in relationship to each other and over time
Liquidity ratios: are measures of a firm’s short-term ability to pay maturing obligations.

7. Liquidity ratios
Working Capital = Current assets – Current liabilities
Current ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑒𝑠
Quick ratio = 𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒂𝒔𝒔𝒆𝒕 −𝒊𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒆𝒔

8. Current ratio
Current ratio provides a measure of the firm’s ability to pay current liabilities
You can analyze by how much the company has ( current ratio) to pay for every $ 1
The minimum accepted current ratio is 2:1

9. Quick ratio
Includes all current asset except inventory, which is least liquid and may not be ready converted into cash
The minimum accepted quick ratio is 1