Taking a Look at Emera

684 WordsFeb 24, 20183 Pages
Liquidity Liquidity ratios shows the ability of a company to pay off short term obligated debts and fulfill the requirements of cash for unexpected events [1]. The comparison of the liquidity ratios of several individual companies is meaningful, only if those companies are in a same industry and legal system. In the rest of this part, we are going to discuss more details about working capital and current ratio which are 2 key indicators for displaying the liquidity of companies Working capital is mostly used to measure the efficiency of the company and its overall health in a short term, in our case it is one year. And current ratio showed whether the asset of the company is larger than its debt in a short period or not. In general, the higher liquidity ratio, the better ability to cover the short term debits. Based on the calculation from previous part, we noticed that Fortis Inc. has a large positive working capital around 6376 million dollars and its Current ratio is 1.553 which is larger than 1 in 2013.It means this company had a strong ability to pay off its short term liabilities immediately. However, at the same time, Emera showed a big negative working capital number with a current ratio less than one in 2013. It suggested that Emera might not be able to pay off its short term liability immediately and may need additional time to collect money. The company is considered as an over-leveraged company and should find a solution to either get more current assets by

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