Forum Archive Index - May 2001

["Tony" <tony@ltdrisk.com>]

jerrold
At last, my question was noticed. I was beginning to think it was not worth
discussion...!
Yes, I reason that if a co has negative working capital then it goes out of
business...bankrupt???

For the time being I will flag this for TEL and do some other companies and
see what I get.
I will also ask the knowledgeable for an exlanantion...
Other companies on my list are The Warehouse, Steel and Tube, CAH, United
Networks.
tony


-----Original Message-----
From: owner-sharechat@sharechat.co.nz
[mailto:owner-sharechat@sharechat.co.nz]On Behalf Of jerrold poh
Sent: Saturday, 26 May 2001 14:49
To: sharechat@sharechat.co.nz
Subject: Re: [sharechat] Financial Analysis - TEL


tony,

that's strange, i was expecting atleast one person to reply to this message,
but either no-one has any idea what you're going on about, or people have
just
overlooked this email?  anyway, i'll respond to it.

i remember analysing this company awhile ago (when the dividends were still
high), and saw the exact thing that you saw.  i dunno ... but during the
time i
was doing 7th form accounting, and i'm not sure now .. but i remember them
teaching me that  didn't they say that for a company to be still trading, it
has to pass a liquidity test .. which was a current (or was that liquid)
ratio of over one?

am i mistaken?


jerrold.


On Thu, May 24, 2001 at 11:24:38PM +1200, Tony wrote:
> After many years of just glancing over "the theory" I have begun building
a
> complete set of financial ratios from my text book and applied them to
TEL(a
> nnual report 2000), to start with.
>
> I note that in the Measures of Liquidity section, TEL's current ratio (cur
a
> ssets/cur liabs) is less than 1 and its net working capital (cur assets -
cu
> r liabs)is negative for 1999 and 2000.
>
> Can anyone explain why the nature of TEL's business allows this when the
lit
> erature considers the above as not good?
>
> TonyDB


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