How Does High Liquidity Risk Cause Tlc Suffer Big Loss

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hoarding cash. On one hand, to hoarding cash, the company may delay the payroll and work has ground to a halt. On the other hand, selling assets may cause company suffer big lose. Assets that are difficult to sell in an illiquid market carry a liquidity risk since they cannot be easily converted to cash at a time of need. Liquidity risk may lower the value of certain assets or businesses due to the increased potential of capital loss. Therefore, high liquidity risk could cause TCL suffer huge lose.
Operational risk. Operational risk summarizes the risks a company undertakes when it attempts to operate within a given field or industry. Operational risk is the risk not inherent in financial, systematic or market-wide risk. It is the risk remaining after determining financing and systematic risk, and includes risks resulting from breakdowns in internal procedures, people and systems.
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Operating performance and profitability can be assessed by using both margin analysis from the income statement, as well as, ROE. The trend for the gross profit margin has been decreased, ranging from 18% in 2002 to 15% in 2006. While the operating profit suffered sharply downturn, ranging from 553 in 2002 down to even negative 2,497 in 2006.
Return on equity (ROE) is the amount of net income returned as a percentage of shareholder’s equity. Return on equity measures a corporation 's profitability by revealing how much profit a company generates with the money shareholders have invested. Profit is the key to a company, the reason that affected the profit is the

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