For Immediate Release
Chicago, IL – November 21, 2019 - Stocks in this week’s article are Qualys, Inc. QLYS, Kirkland Lake Gold Ltd. KL, Synaptics Inc. SYNA, Ubiquiti Inc. UI and Commvault Systems, Inc. CVLT.
Grab These Impressive Liquid Stocks for Remarkable Returns
Investors seeking strong returns may allocate their assets to stocks with significant liquidity. Liquidity is an important parameter to indicate a company’s capability for meeting debt obligations by converting assets into cash.
A company with favorable liquidity has the potential to generate higher returns as liquidity drives growth. However, one should exercise caution before investing in such stocks. While a high liquidity level may imply that the company is meeting its obligations at a faster rate than its peers, it may also indicate that the company is failing to use its assets efficiently.
Hence, the efficiency level of a company should be considered in addition to its liquidity to identify potential winners as this combination indicates underlying financial strength.
Measures to Identify Liquid Stocks
Current Ratio: It measures current assets relative to current liabilities. This ratio is used for measuring a company’s potential to meet both short- and long-term debt obligations. Thus, a current ratio — also known as working capital ratio — below 1 indicates that the company has more liabilities than assets. However, a high current ratio does not always indicate that the company is in good financial shape. It may also mean that the company has failed to utilize its assets significantly. Hence, a range of 1 to 3 is considered ideal.
Quick Ratio: Unlike current ratio, quick ratio — also called “acid-test ratio" or "quick assets ratio" — indicates a company’s ability to pay short-term obligations. It considers inventory excluding current assets relative to current liabilities. Like the current ratio, a quick ratio of greater than 1 is desirable.
Cash Ratio: This is the most conservative ratio among the three, as it takes into account only cash and cash equivalents, and invested funds relative to current liabilities. It measures a company’s ability to meet its current debt obligations using the most liquid of assets. Though a cash ratio of more than 1 may point to sound financials, a higher number may indicate inefficiency in cash utilization.
So, a ratio greater than 1 is desirable at all times but may not always appropriately represent a company’s financial condition.
For the rest of this Screen of the Week article please visit Zacks.com at:https://www.zacks.com/stock/news/629122/grab-6-impressive-liquid-stocks-for-remarkable-returns
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Qualys, Inc. (QLYS) : Free Stock Analysis Report
Synaptics Incorporated (SYNA) : Free Stock Analysis Report
CommVault Systems, Inc. (CVLT) : Free Stock Analysis Report
Ubiquiti Inc. (UI) : Free Stock Analysis Report
Kirkland Lake Gold Ltd. (KL) : Free Stock Analysis Report
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