Zacks.com Featured Highlights: WellCare Health Plans, Boston Beer Company, AppFolio, TriNet Group And Urban Outfitters

For Immediate Release

Chicago, IL – December 11, 2017 - Stocks in this week’s article WellCare Health Plans Inc. (NYSE:WCG) , The Boston Beer Company Inc. (NYSE:SAM) ,AppFolio Inc. (NASDAQ:APPF) , TriNet Group Inc. (NYSE:TNET) and Urban Outfitters Inc. (NASDAQ:URBN) .

5 Top Liquid Stocks for a Winning Portfolio

Liquidity of a stock is an important yardstick that investors often ignore. It primarily indicates a company’s capability to meet debt obligations by converting assets into liquid cash and equivalents.

These stocks have always been in demand due to their potential to provide maximum returns. However, one should exercise caution before investing in such stocks. While a high liquidity level may imply that the company is meeting its obligations at a faster rate compared to peers, it may also indicate that the company is failing to use its assets efficiently.

Hence, one may consider the efficiency level of a company in addition to its liquidity to identify potential winners.

Measures to Identify Liquid Stocks

Current Ratio: It measures current assets relative to current liabilities. This ratio is used for measuring a company’s potential to meet both short- and long-term debt obligations. Thus, a current ratio — also known as working capital ratio — below 1 indicates that the company has more liabilities than assets. However, a high current ratio does not always indicate that the company is in good financial shape. It may also mean that the company has failed to utilize its assets significantly. Hence, a range of 1 to 3 is considered ideal.

Quick Ratio: Unlike current ratio, quick ratio – also called “acid-test ratio" or "quick assets ratio" – indicates a company’s ability to pay short-term obligations. It considers inventory excluding current assets relative to current liabilities. Like the current ratio, a quick ratio of greater than 1 is desirable.

Cash Ratio: This is the most conservative ratio among the three, as it takes into account only cash and cash equivalents, and invested funds relative to current liabilities. It measures a company’s ability to meet its current debt obligations using the most liquid of assets. Though a cash ratio higher than 1 may point to sound financials, a high number may indicate inefficiency in cash utilization.

So, a ratio greater than 1 is desirable at all times but may not always appropriately represent a company’s financial condition.

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/285375/5-top-liquid-stocks-for-a-winning-portfolio

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