Liquidity Analysis Of Zimbabwe Stock Exchange (ZSE) Listed Retail Companies Using Traditional Ratios And Cash Flow Ratios.

Author(s)

Kudakwashe MAVENGERE ,

Download Full PDF Pages: 58-64 | Views: 340 | Downloads: 95 | DOI: 10.5281/zenodo.3460303

Volume 4 - July 2015 (07)

Abstract

The objective of the paper is to analyse the significance of traditional ratios compared cash flows ratios in liquidity analysis of Zimbabwe Stock Exchange (ZSE) listed retail companies, with emphasis on these impact investor decision making. The analysis covered a period of 5 years (2010-2014) consisting of companies in the same sector, with the financial information having been obtained from the companies websites. The findings are as follows: - Significant statistical differences exist when the current ratios as well as the quick ratio are equated with operating cash flow ratio and critical needs ratio. - There exists no significant statistical difference between the interest coverage and operating margin ratio when contrasted with cash interest coverage and operating cash margin ratios. Traditional ratios that incorporate current and quick ratio in liquidity analysis of companies will lead to flawed investor decision making. 

Keywords

Traditional ratios, cash flow ratios, liquidity, decision making, and accrual basis

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