Accounting Help!

deathscythe99 SG

-Wrong place to post, but since my forum...haha- :p

Anyway, just wanna ask you guys, what's the difference between having a "strong" financial position and a "healthy" financial position (both in reference to a company).

Is it as though "Healthy" = in the black (low debt ratio, high current assets)? and "Strong" = profitable with good cash flow into the future? (e.g. recurring profits?)

Is it that both are overlapping in certain ways?

laurence82 SG

i....really dont noe how to help u man.... Laughing

deathscythe99 SG

*sigh*

Die le lar Rolling Eyes

joeacid SG

u shld post it here at my forum:
http://www.sgforums.com/?action=forum_display&forum_id=2141
Razz hehe

Well, anyway... Lets see... the differences between a strong and a healthy company huh...

For healthy urs is low debt ratio, high current assets right?
Hmm... Low debt ratio is right but definately not high current assets because anything more than 1:2 is already too high where current assets are not used wisely. Hmm... of coz if the stock/inventory is high, its a different case useless u are doing acid test.

As for Strong... you were saying profitable with good cash flow into the future? (e.g. recurring profits?) right? Hmm... This i'm not really sure but i believe it's correct. Maybe the Gross Profit/Net Profit Margin is high? Hmm... not sure, but i think it shld be ard there... Mr. Green

joeacid SG

ops sry for the double post, juz accidentally clicked on the quoting while i edit my post

deathscythe99 SG

Hmm...I was thinking if a company with strong finances would be healthy also....true or false? Rolling Eyes

joeacid SG

Hmm.. Yes properbly but... i believe there can be cases where profit is high i.e Strong but too much of stocks/inventory in current ratio which means that the ratio between a current ratio and a acid test ratio is big and that the ratio is too much more than 1 : 2. It'll proves Strong but unhealthy company.

I believe it can still happens, because there are always different cases.

deathscythe99 SG

So in any case, "strong" and "healthy" are self-defined? Rolling Eyes

joeacid SG

Actually it really depends how you argue it. There's no right and wrong answer. Probably the Strong and Healthy are different but it depends how much you can argue if a company is Strong/Healthy or vice versa~

deathscythe99 SG

So can a company be both strong and healthy? Rolling Eyes

silv3rgal SG

Originally posted by deathscythe99:

So can a company be [b]both strong and healthy? Rolling Eyes [/b]

strong and healthy = overwhelming profitability + good liquidity position ??

joeacid SG

Originally posted by deathscythe99:

So can a company be [b]both strong and healthy? Rolling Eyes [/b]

Yes of course. Try reading what i said earlier. You shld understand it slowly.
Or u can try a case study and read it slowly.

joeacid SG

Yes, high or stable profitability + Good Liquidity Position

deathscythe99 SG

Reading some of the financial statements online, really weird...some CEOS say they're healthy, others say they're in a strong position, that's why.

Hmm...or maybe there REALLY isnt any definitive (accepted by all) ans?

deathscythe99 SG

Good point there...Food for thought...

Hmm...

joeacid SG

yah i believe so. Anyway, its really hard to say, as different country people also say different things. U.S, Aussie & UK has different comments too.
But i realised that Aussie and UK ones are more similar.

Hmm... Btw, one answer from a prof also may not be agreeable to another prof. So, if one says it's Strong and another say it isn't becoz he din argue, then is it right or not? So, it really depends~

deathscythe99 SG

How about....wrt Singapore?

In Singapore, when a CEO says his company's financial position is "strong", or "healthy", what would that mean to you?