ECON118_GROUP_PART2_SHORT-TERM_INVESTING

ECON118_GROUP_PART2_ - Short-Term Loans As expected from a large profitable company in the pharmaceuticals industry Abbott Laboratories carries a

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Unformatted text preview: Short-Term Loans As expected from a large, profitable company in the pharmaceuticals industry, Abbott Laboratories carries a large amount of cash on hand. In fact, their almost $9 billion in cash and cash equivalents in 2009 is over half of their current assets, and their current ratio is at a strong and healthy 1.787. This shows that although Abbott Laboratories has little need for issuing short-term debt, if they decided to do so it would be a very safe investment for an investor. Their dynamic operating cash flow to current liabilities ratio is also well over the .4 safe zone for their field, again showing the security in a short-term investment in Abbott Laboratories. A downfall of such security is an expectedly low interest rate on the investment made, but this is a given with such confidence in return. Johnson & Johnson shows even more assurance in short-term investing with very high current and acid-test ratios, however their products do move slower than Abbott’s and they take longer to pay off their accounts payable, as shown in the days supply of...
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This note was uploaded on 12/05/2011 for the course ECON 118 taught by Professor Loster during the Fall '07 term at UCSB.

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