In the article I read, Zellers is proving there is no such thing as being too liquid. Zellers is a classic Canadian superstore that sells everything from electronics, children’s toys, clothing, seasonal gear, toiletries, sports gear, anything you can think of. However Zellers’ life is slowly coming to an end. Target, an American superstore, is coming to take over and transform the vast majority of Zellers stores.
Liquidity is the ability to convert a company’s assets into cash. For example, cash is extremely liquid whereas something like a factory would not be very liquid. We discussed in class that being too liquid is not always a good thing. However in the case of Zellers, being liquid is extremely important to them at this point in time. They are trying to convert all assets into cash as quickly as possible before Target takes over. In my opinion, I believe this not generally the best strategy but since Zellers’ life has an expiration date, it is a good option for Zellers. This strategy is not commonly used or taught but this has been an exception due to the knowledge of closure and it is the best way to maximize Zellers’ profits.
Picture obtained from:
Toronto Life. Goodbye Zellers, hello Target! The U.S. chain is finally coming to Canada, 1.8 billion later. http://www.torontolife.com/daily/style/shop-talk/2011/01/13/goodbye-zellers-hello-target-the-u-s-chain-is-finally-coming-to-canada-1-8-billion-later/