Suppose that you have 1.5 million rupees to invest in the stock market. Given that people will always have to eat, you have decided to look for investment opportunities in Pakistan Petroleum Ltd.(PPL)and attock refinery Ltd.(ATORL). Your analysis of each company's financial statements reveales that both have negative working capital,and both have current ratio of less than 1 to 1. Based on your findings, should you be concerned about the short-term liquidity of these two company? Explain.
Suppose that you have 1.5 million rupees to invest in the stock market. Given that people will always have to eat, you have decided to look for investment opportunities in Pakistan Petroleum Ltd.(PPL)and attock refinery Ltd.(ATORL). Your analysis of each company's financial statements reveales that both have negative working capital,and both have current ratio of less than 1 to 1. Based on your findings, should you be concerned about the short-term liquidity of these two company? Explain.
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 7P
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Suppose that you have 1.5 million rupees to invest in the stock market. Given that people will always have to eat, you have decided to look for investment opportunities in Pakistan Petroleum Ltd.(PPL)and attock refinery Ltd.(ATORL). Your analysis of each company's financial statements reveales that both have negative working capital ,and both have current ratio of less than 1 to 1. Based on your findings, should you be concerned about the short-term liquidity of these two company?
Explain.
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