The problem with some analysts these days is that they have no clue of financials, accounting, financing decisions, investment decisions, dividend policies, buybacks.....they are simply analysts who call out a target based on what other analysts have concluded.
Being an accountant by profession, a banker by day and university finance professor by night, I can safely say that Andrew Snyder's liquidity analysis is completely out of line, although his ratios are correct.
Potash Corp. (POT), on the surface, has a negative current ratio, negative working capital as of June 30, 2008. This is a major shift from December 31, 2007 and due entirely to the repurchase of close to $1.5 billion of company shares which consumed cash. They did this as they thought this was the best investment with a positive net present value. Their cashflow will quickly replenish this situation and we should not be alarmed with this situation.
To say that the company has a liquidity problem is like saying an individual has a liquidity problem; although he is making $900,000 per year, his house is paid off, he has $5,000 in his bank account and owes $8,000 on his credit card.....yes, he is illiquid, but he can quickly offset this situation with his earnings or new long term debt on his house.
The stock is trading based on a $450 per tonne while the current price is $1,000 per tonne, and the company's President recently said he could get $5,000 per tonne, but did not want to go this route due to the possibility of killing demand.
I suggest that analysts like Snyder understand the full situation prior to publishing these types of articles.
Disclosure: Author holds a long position in POT