For Immediate Release
Chicago, IL – January 5, 2022 – Stocks in this week’s article are Kohl’s Corp. (
KSS Quick Quote KSS - Free Report) , Buckle ( BKE Quick Quote BKE - Free Report) , Cavco Industries ( CVCO Quick Quote CVCO - Free Report) , and Century Casinos ( CNTY Quick Quote CNTY - Free Report) . 4 Top Liquid Stocks to Watch for Fat Returns in 2022
Liquidity determines a company’s ability to meet debt obligations by converting assets into liquid cash and equivalents. Robust liquidity levels support business growth. Adding stocks with favorable liquidity to the portfolio is likely to work in favor of investors seeking healthy returns.
However, one should be alert before investing in such stocks. While a high liquidity level may imply that the company is clearing its dues at a faster rate compared with peers, this may also suggest that it is unable to utilize assets competently.
Hence, one may consider a company’s efficiency level and its liquidity for identifying potential winners.
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 short- and long-term debt obligations. A current ratio — also known as the 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 be that the company failed to utilize its assets significantly. Hence, a range of 1-3 is considered ideal.
Quick Ratio: Unlike the current ratio, the quick ratio — also called the “acid-test ratio" or the "quick assets ratio" — reflects on a company’s ability to pay short-term obligations. It considers inventory excluding the current assets relative to current liabilities. Like the current ratio, a quick ratio of more than 1 is desirable. Cash Ratio: This is the most conservative ratio among the three, as it takes into account cash and cash equivalents as well as invested funds relative to current liabilities. It measures a company’s ability to meet current debt obligations using the most liquid assets. Though a cash ratio of more than 1 may point toward sound financials, a higher number may indicate inefficiency in cash utilization.
A ratio greater than 1 is desirable at all times but may not always 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/1846981/4-top-ranked-liquid-stocks-to-watch-out-for-fat-returns-in-2022 Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. About Screen of the Week
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