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Liquidity
- Liquidity Telus Corp. appears to be more liquid than BCE Inc. in terms of current ratio, even though the value is less than 1.
- However both companies might have some liquidity problems since their current asset is less than their current liability.
- Moreover, for the cash to current debt coverage, Telus is still more liquid than BCE because the company is generating relatively more cash to pay its debt.
- Another metrics that shows high liquidity of Telus is the receivable turnover.
- Telus is more efficient in collecting money from clients’ credits compared to BCE, which explains the reason why Telus has more cash in hand.
- Similar to current ratio, both companies have low receivable turnovers, but this is not necessarily a negative trend of financial behavior because credit policies vary with companies.
- If a company has a high receivable turnover on its financial report, it might not be able to sustain a good partnership with its clients; which is true for service companies.
- However, investors may be interested in the credit policies offered by the companies since receivable turnover is still an important measurement for the financial status.
- Solvency BCE has a higher debt to total asset ratio, which indicates that it is less solvent than Telus.
- Both companies have ratios higher than 0.5, which means that more than half of the total asset is from debt.
- This may suggest a high risk on companies’ operations because they would have more difficulty obtaining new loans for new projects.
- Moreover, BCE is still less solvent since the time interest earned is lower than that of Telus.
- Telus is more capable in repaying its debt.
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