So the 1% has all the money . . . help me make the point based on investor filings.
October 3, 2011 2:34 PM Subscribe
[financial analysis filter] How can I identify the amount of money that a publicly-traded company could spend without being irresponsible to its investors or its ability to continue operating?
I'm working on a project where we would like to argue that big publicly-traded firms are sitting on a bunch of cash and should be investing it in the economy, their employees, the working class, you get the picture. My questions is this: using the information these public companies disclose to the SEC and their investors, how should I identify whether this is a strong/valid argument?
To give you an idea of what I mean:
I was planning to use an analysis of the company's current ratio (assets/liabilities=current ratio): Let's say the average current ratio in the warehousing industry is 1.2, and the Kensington314 Warehouse Company has a current ratio of 1.5. In the simplistic view I've taken of the current ratio analysis, the company is idly sitting on however much money it would take to bring their assets-to-liabilities ratio down to the industry standard of 1.2.
Is that too simplistic? Inaccurate? Is there a better measure that firms use to know how much money they could invest or spend without going under?