Four Blue Chip Stocks May Face Liquidity Problem, Current Ratio Lower Than 1 – T, WMT, VZ, PG

  on Jan 07,2013 Posted in Finance ,Investment Ideas
 
Share |
We're on   

Current ratio shows a firm’s ability to pay short-term obligations and other current liabilities by comparing current assets to current liabilities. Current ratio shows a corporation’s ability to remain solvent.

A current ratio of one means that book value of current assets is exactly the same as book value of current liabilities. Investors look for a corporation with a current ratio of 2:1, showing current assets twice as big as current liabilities.

While, the Quick Ratio is used as a solvency metric to determine a company’s ability to pay down current liabilities with its cash, short term equivalents, and accounts receivables. In this article we will discuss liquidity position of Dow Jones stocks. Total four blue chip components have current ratio lower than 1, which is considered as weak.

AT&T Inc (NYSE:T) has the market capitalization of 200.11 billion while its PEG ratio was 7.24. The telecommunication giant has average market volume of 26.17 million. The Institutional investors own 56% shares of the company. Shares of the company were moving ahead of 50 days simple moving average with 3.27% while 20 days simple moving average with 3.53%. The company has current ratio of 0.62 while debt to equity ratio was 0.63.

Wal-Mart Stores, Inc (NYSE:WMT) has market capitalization of 231.02 billion. The world’s biggest retaile store chain has price to earnings ratio of 14.21 while its PEG ratio was 1.51. The company has 3.35 billion shares outstanding while company offers EPS of $4.86. Net profit margin was 3.73% while gross profit margin was 24.86%. Current ratio of company was 0.83 and quick ratio was 0.21 while long term debt to equity ratio was 0.57. Shares of the company were lagging behind its 50 days simple moving average with -2.46% while ahead of SMA 200 with 0.96%.

The current ratio of Verizon Communications Inc (NYSE:VZ) was recorded 0.96 while quick ratio was 0.92. The company has market capitalization of 126.43 billion while its Price to earnings ratio was 41.30. The PEG ratio of biggest telecom company in U.S. was 4.60 while its P/B ratio was 3.36. Company’s net profit margin was 10.74% while ROE was 8.03%. Stock volatility for the week was 1.50% while for the month it is recorded as 1.31%.

In the liquidity analysis of The Procter & Gamble Company (NYSE:PG) current ratio was booked as 0.97 while quick ratio was recorded as 0.67. The company offered the $3.06 EPS while its ATR value was 0.80. The company has market capitalization of 188.91 billion and its institutional ownership was 58%. Shares of the company were moving ahead of 50 days simple moving average with 0.41% while 200 days simple moving average with 5.26%. The company paid dividend yield of 3.25%.

From the liquidity analysis of Dow Jones stocks we can say that these four blue chip stocks have lower current ratio.

Disclosure: The views and opinions expressed in this article are exclusively those of the authors who have no stake in any stocks mentioned, and hold no plan to acquire any stake within the next 5 days.

 



 

Leave a Reply