POSCO (PKX) | Liquidity Analysis

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Liquidity ratios measure the company's ability to meet its short-term obligations.

Ratios (Summary)

POSCO, liquidity ratios

	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
Current ratio	1.59	2.22	2.02	2.17	2.41
Quick ratio	0.92	1.55	1.10	1.34	1.52
Cash ratio	0.40	0.93	0.51	0.69	0.78

Source: Based on data from POSCO Annual Reports

Ratio	Description	The company
Current ratio	A liquidity ratio calculated as current assets divided by current liabilities.	POSCO's current ratio improved from 2008 to 2009 but then deteriorated significantly from 2009 to 2010.
Quick ratio	A liquidity ratio calculated as (cash plus short-term marketable investments plus receivables) divided by current liabilities.	POSCO's quick ratio improved from 2008 to 2009 but then deteriorated significantly from 2009 to 2010.
Cash ratio	A liquidity ratio calculated as (cash plus short-term marketable investments) divided by current liabilities.	POSCO's cash ratio improved from 2008 to 2009 but then deteriorated significantly from 2009 to 2010.

	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
Selected Financial Data (USD $ in millions, translated from KRW ₩)
Current assets	23,976	17,732	17,589	15,381	13,158
Current liabilities	15,119	7,970	8,724	7,079	5,465
Current Ratio, Comparison to Industry
POSCO¹	1.59	2.22	2.02	2.17	2.41
Industry, Basic Materials	1.67	1.76	1.42	1.37	–

Source: Based on data from POSCO Annual Reports

2010 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= 23,976 ÷ 15,119 = 1.59

Ratio	Description	The company
Current ratio	A liquidity ratio calculated as current assets divided by current liabilities.	POSCO's current ratio improved from 2008 to 2009 but then deteriorated significantly from 2009 to 2010.

	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
Selected Financial Data (USD $ in millions, translated from KRW ₩)
Cash and cash equivalents, net of government grants	3,183	1,888	1,973	1,381	1,007
Current portion of investment securities, net	41	49	41	240	179
Trading securities	163	435	981	1,375	2,151
Short-term financial instruments	2,613	5,002	1,448	1,863	933
Trade accounts and notes receivable, net of allowance for doubtful accounts and present value discount	7,072	4,421	4,670	4,312	3,754
Short-term loans receivable	250	141	76	59	37
Other accounts and notes receivable, net of allowance for doubtful accounts and present value document	606	385	427	230	265
Total quick assets	13,928	12,320	9,616	9,460	8,326
Current liabilities	15,119	7,970	8,724	7,079	5,465
Quick Ratio, Comparison to Industry
POSCO¹	0.92	1.55	1.10	1.34	1.52
Industry, Basic Materials	0.95	1.01	0.71	0.68	–

Source: Based on data from POSCO Annual Reports

2010 Calculations

¹ Quick ratio = Total quick assets ÷ Current liabilities
= 13,928 ÷ 15,119 = 0.92

Ratio	Description	The company
Quick ratio	A liquidity ratio calculated as (cash plus short-term marketable investments plus receivables) divided by current liabilities.	POSCO's quick ratio improved from 2008 to 2009 but then deteriorated significantly from 2009 to 2010.

	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
Selected Financial Data (USD $ in millions, translated from KRW ₩)
Cash and cash equivalents, net of government grants	3,183	1,888	1,973	1,381	1,007
Current portion of investment securities, net	41	49	41	240	179
Trading securities	163	435	981	1,375	2,151
Short-term financial instruments	2,613	5,002	1,448	1,863	933
Total cash assets	6,000	7,373	4,443	4,859	4,270
Current liabilities	15,119	7,970	8,724	7,079	5,465
Cash Ratio, Comparison to Industry
POSCO¹	0.40	0.93	0.51	0.69	0.78
Industry, Basic Materials	0.52	0.57	0.32	0.24	–

Source: Based on data from POSCO Annual Reports

2010 Calculations

¹ Cash ratio = Total cash assets ÷ Current liabilities
= 6,000 ÷ 15,119 = 0.40

Ratio	Description	The company
Cash ratio	A liquidity ratio calculated as (cash plus short-term marketable investments) divided by current liabilities.	POSCO's cash ratio improved from 2008 to 2009 but then deteriorated significantly from 2009 to 2010.