An attempt on the applicability of Basel III liquidity coverage ratio (LCR) and capital adequacy ratio (CAR) requirements to selected food retail sector firms and a comparison with traditional financial ratio analysis

Banks, in financial markets, work as intermediaries between who need funds and those who have fund surplus. Funds gathered from a person, agency or institute are placed to a person, agency or institute who need funds. At this point, banks have to pay their money to those who have fund surplus on demand, while call back from organizations who need funds at a particular time set when the money placed. Even though it's possible to recall a credit, this process is avoided for the reason that reputationally it has big reservations. Accordingly, in this point two main problems appear: First one is maturity mismatch and the second is credit safety. Maturity mismatch is the problem of being shorter the fund maturity of investors than demandants. The second problem is the situation that withholding payment of a placed credit when it is due or late payment. These two problems actually arise from a single point: liquidity. First point features the liquidity, in other words capability of obligation to pay, of the banks while the second of a person, agency or institute who demand funds. Spreading of financial crisis emerges with becoming unable of a financial institution after one or more debtor fail to discharge of obligation, because of inadequacy of liquidity, and accordingly with reaching a point of failing to discharge of obligation of this financial institution itself, failing the other creditor financial institutions successively. Financial crisis can reach a point that put even governments in a tight spot, it's essential that financial institutions and whom they lend to be liquid. This significance is evaluated within countries and in a platform between countries. Bank of International Settlements (BIS) set up a committee, named Basel Committee, in order to prevent emerging and spreading the financial crisis. This committee targeted to ensure the financial security of financial institutions taking some decisions. Financial criteria, with some changes, take their present form. The point to be emphasized is that these criteria only bind the financial institutions. There is no obligation for the debtors unless being a financial institution. Financial institutions use several evaluation standards while choosing the person, agency or institute to whom are credit a fund. Financial analysis is one of the methods to present the financial status of an institutions and the most significant of all evaluation tools in using evaluations of big firms. According to the criterion in consequence of this evaluation, a decision is made whether to give a credit or not. In this thesis, it is aimed to show the contingency situation in case of adaptation the liquidity and capital adequacy criteria to firms. While implementation process, we confronted an inconsistency problem of financial statements of between financial institutions and real sector firms. In order to overcome this problem we implemented transformation processes. Because of the scale difference, we also used some parameters and ratio smoothing, which committees and national board of audits use to audit institutions. We implemented this study to the firms which operates in stock market of retail industry, which we suppose that it is the most approximate sector to financial institutions from among the real sector firms. Three firms are analised and, then compared the ratio analysis, one of the financial analysis techniques and our adopted method.