A poor standard

Rating agency Standard & Poor’s has recently released guidelines totest liquidity that could be an efficient probe into company finances. BrettHumphreys looks at how S&P has arrived at its calculations, asks if the liquiditymeasures are too conservative and suggests ways that they might be improved

Rating agency Standard & Poor’s has recently unveiled a new survey designed to evaluate the liquidity of a company. Specifically, this test determines if a company has secured sufficient liquidity to operate under various stress scenarios. While this is a commendable effort that may provide great insight into corporate finances, it may be worthwhile to reconsider the actual parameters