The Analysis of Company Liquidity A Using Cash Conversion Cycle Application: Evidence from Taiwan

Li-Hua Lin, Szu-Hsien Lin, Yi-Min Lin and Chun-Fan You

Global Journal of Business Research, 2014, vol. 8, issue 5, 97-103

Abstract: It is important to determine whether firms realize assets within a short period to settle liabilities when the debts are due. Most common indicators used to measure liquidity are the current and quick ratios. However, the cash conversion cycle period (CCC) may be a better approach. This study chooses two Taiwan companies in food industries: a listed company (Uni-President) and a delisted company (Tsin Tsin) to compare performance based on liquidity indicators. We examine financial data of the two companies from 1996 to 2005 (Tsin Tsin was delisted in 2006), to calculate their current ratio, quick ratio and cash conversion cycles. The research results show that CCC indicators better reflect the company's actual short term debt-paying ability and liquidity.

Keywords: Liquidity; Working Capital; Current Ratio; Cash Conversion Cycle (search for similar items in EconPapers)
JEL-codes: G33 G34 (search for similar items in EconPapers)
Date: 2014
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