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Poseidon Concepts Corp  (TSX:PSN) Cash, Cash Equivalents, Marketable Securities: C$3.5 Mil (As of Sep. 2012)

Poseidon Concepts Corp's quarterly cash, cash equivalents, marketable securities increased from Mar. 2012 (C$1.83 Mil) to Jun. 2012 (C$12.12 Mil) but then stayed the same from Jun. 2012 (C$12.12 Mil) to Sep. 2012 (C$3.46 Mil).


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Poseidon Concepts Corp Annual Data

Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11
Cash, Cash Equivalents, Marketable Securities Premium Member Only Premium Member Only 0.71 0.37 0.00 0.00 0.00

Poseidon Concepts Corp Quarterly Data

Dec06 Dec07 Dec08 Dec09 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12
Cash, Cash Equivalents, Marketable Securities Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.00 0.00 1.83 12.12 3.46

Calculation

Cash and cash equivalents are the most liquid assets on the balance sheet. Cash equivalents are assets that are readily convertible into cash, such as money market holdings, short-term government bonds or Treasury bills, marketable securities and commercial paper.

Marketable Securities are very liquid securities that can be converted into cash quickly at a reasonable price.


Explanation

Marketable securities are very liquid as they tend to have maturities of less than one year. Furthermore, the rate at which these securities can be bought or sold has little effect on their prices.

A high number means either:

1) The company has competitive advantage generating lots of cash

2) Just sold a business or bonds (not necessarily good)

A low stockpile of cash usually means poor to mediocre economics.

There are 3 ways to create large cash reserve.

1) Sell new bonds or equity to public

2) Sell business or asset

3) It has an ongoing business generating more cash than it burns (usually means durable competitive advantage)

When a company is suffering a short term problem, Buffett looks at cash or marketable securities to see whether it has the financial strength to ride it out.

Important: Lots of cash and marketable securities + little debt = good chance that the business will sail on through tough times.

Test to see what is creating cash by looking at past 7 yrs of balance sheets. This will reveal how the cash was created.


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