An organization’s liquidity

The ability of a company to meet its short-term financial obligations is defined as its liquidity. The liquidity ratio assesses a company’s ability to repay its short-term loan obligations. This is accomplished by comparing an organization’s most liquid assets, or those that can be easily converted to cash, to its short-term liabilities. When it comes down to it, the greater the amount of coverage of liquid assets to short-term liabilities, the better. CO2 Solutions Company’s liquidity during 2014, 2015, and 2016 is examined below. A diminish in accounts receivable at June thirtieth, twenty fourteen of $277,227 , by and large show the lessening in revenues of the accounts receivable as per the ecoENERGY venture in the Canadian oil sands. A reduction of $34,315 in equipment, plant and net property is prevalently identified with depreciation.

There was an increase of $2,184 in the investment of licenses. According to the use of IAS 38, “Elusive Assets”, CO2 Solutions looks at that as an immaterial resource worthy of capitalization built up just once it has achieved a phase where it is prepared to begin the way toward being licensed, and by and large just the expert and documenting charges paid to secure the licenses are promoted.

Analysis of CO2 Solutions Liquidity for the year 2014

Current liquidity ratio= Current Assets/ Current liabilities

Current Assets = 2549326 – 388863=2160463

Current liabilities= 505374

Current liquidity ratio = 2160463/505374

=4.3

This means that for each $1 in current liabilities, the CO2 Solutions has $4.3 in current assets. A liquidity ratio that is better than one to one is viewed as great. The higher the proportion, the better the financial position of the organization. CO2 Solutions is in better financial position and the present proportion of 4.3 to 1 shows that they can pay their short term obligations.

Analysis of CO2 Solutions Liquidity for the year 2015

As at June 2015 there was no revenue for that financial year. There was a revenue total of $388,863 in 2014 that was essentially produced from innovative work joint efforts with CO2Capture Project. The net loss expanded by $3,577,521 mirroring the vast research and Advancement expenditure for the Demonstration Project amid the financial year 2015.

A $803,329 net increment in current liabilities mirrors a higher exchange creditor liabilities balance. These exchange creditor liabilities were considerably paid down in July 2015 after the receipt of assets from the 2015 Private Placement. A $531,624 diminish in non-current liabilities is essentially a consequence of the change in June 2015 of the Convertible Debentures issued in August twenty thirteen, offset by a rise of $166,004 in the refundable contribution.

Liquidity Ratio for the year 2015

Liquidity Ratio= Current Assets/Current Liabilities

= 5180536/803329

=6.4

This means that for each $1 in current liabilities, the CO2 Solutions Company has $6.4 in current assets. Since this liquidity ratio is better than one to one, then it is viewed as great. The higher the proportion, the better the financial position of the CO2 solutions. CO2 Solutions as at June 2015 was in a better financial position and its present proportion of 6.4 to 1 shows that they could pay their short term obligations.

Liquidity Ratio for The year 2016

There was no revenue for the financial year ended June 30, 2016. The net loss for the financial year twenty sixteen, diminished by $332,658, or $0.04 per share mirroring a net reduction in development and research expenditures amid the year essentially identified with the fruition of the exhibition venture amid the financial year 2016, offset by increments in Administrative Expenses and Business Development.

A $141,821 net increment in current liabilities reflects an abatement of $602,079 in the exchange creditor liabilities balance offset by $743,900 in extra term loans. The exchange accounts payables were generously paid down in January 2016 after the receipt of stores from the December 2015 public offering and from the returns of the term loans. A $1,071,619 increment in non-current liabilities is basically an aftereffect of the debenture issue in December 2015 and a rise of $72,247 in the refundable contributions.

Computation of Liquidity Ratio for the year 2016

Liquidity Ratio= Current Assets/Current Liabilities

=3380162/945150

=3.6

This means that for each one dollar in current liabilities, the CO2 Solutions Company has three point six dollars in current assets. CO2 Solutions is in better financial position and the present proportion of three point six to one shows that they can pay their short term obligations.

The liquidity for CO2 Solutions was fine and increased throughout the three years period. This is attributed to collaboration of CO2 Solutions and Husky energy which led to the construction of a larger field pilot test. Capital costs were also reduced when in 2015 when CO2 Solutions showed the potential to reduce the size of the CO2 capture equipment. Missouri-based Akermin, a past adversary of CO2 Solutions in the field of catalyst based carbon catch, has chosen to stop operations and sell its assets to co2 solutions thus making CO2 one of the main carbon capture company. The geographical environment has been effected since greenhouse gasses emission has been reduced considerably in unconventional oil production.