Financial Report Analysis NENI MAULIDAH (46110016)

LIQUIDITY ANALYSIS :
CASH RATIO

Present by :

NENI MAULIDAH

46110054

Ø What is meaning of financial report ?

Financial Report is :

”At the end of a period–typically a quarter or a year-financial statements are prepared to report on financing and investing activities in time, and to summarize operating activities for the last period.”

(Subramanyam& Wild (2009))

Ø What is financial statement analysis ?

Financial statement analysis is the method used to find information about the company and to analyze the company's financial position and performance, and to assess the financial performance of the company in the future.

Ø Scope ofFinancial statement analysis :

Ø Liquidity analysis

Ø Solvency analysis

Ø Profitability analysis

Ø Liquidity analysis :

Liquidity analysis is liquidity can be defined as the availability of resources to cover the company's short-term cash needs. There are two aspects ofliquidity analysis, those are working capital and operating liquidity.(Subramanyam & Wild (2009))

Liquidity analysis have some parts, those are :

O     Working Capital :

-         Current Ratio

-         Quick Ratio

-         Cash Ratio

-         Cash Flow Liquidity Ratio

O     Operating Liquidity :

-         Account Receivable Analysis

-         Inventory Analysis

-         Current Liabilities Analysis

Ø CASH RATIO :

This ratio is based on the assumption that thecomponent of non-cash current assets, such as inventory and accounts receivable, classified as illiquid assets because it takes a relatively long time to change into cash and also have a very high risk. So it is not used as a liquidity measure of company.

Formula from cash ratio is :

Cash Ratio =  cash + equivalent cash + Short-term securities invest.

                                                            Current Liabilities

Example :

Years	Cash&Equivalent cash (Rp million)	Short-term investment (Rpmillion)	Current Liabilities (Rpmillion)	Cash ratio
2008	3.324.942	0	7.874.135	0,42
2009	2.769.187	0	7.225.966	0,38

Balance sheet from PT.UNITED TRACTOR Tbk in 2008 and 2009 :

CONCLUSION :

Cash ratio of 0.42 in 2008 showed that for each Rp 1 current liabilities provided or guaranteed by highly liquid assets aboutRp 0.42 or any current liabilities can only be guaranteed by 42% of the highly liquid assets. Meanwhile, in 2009, for each Rp 1 of current liabilities is only guaranteed by highly liquid assets aboutRp 0.38 or any current liabilities can only be guaranteed by 38% of the highly liquid assets. The higher of cash ratio, means that the more liquid of company.