Liquidity Ratios Current Ratio Current Assets/Current Liabilities Discuss current asset % and composition and current liability % and composition. How do they relate? Quick Ratio Current Assets – Inventory/Current Liabilities Subtract ratios to see % of inventory removed from the company and from the industry. Compare the % that the company carries compared to the industry.
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It measures a company's ability to pay short-term obligations with its short-term assets. - Current Assets typically include cash, accounts receivable, inventory, and other assets expected to be converted to cash within a year. - Current Liabilities include Show more…
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Liquidity ratios are used to measure a firm's ability to meet its obligations as they come due. Two of the most commonly used liquidity ratios are the: (1) Current ratio and (2) Quick, or acid test, ratio. The current ratio is the most commonly used measure of solvency. Its equation is: If a firm is having financial difficulty, it typically begins to pay its accounts payable more slowly and to borrow from the bank—both of which will increase its current liabilities, causing a decline in the current ratio. The quick ratio is a measure of a firm's ability to pay off obligations without relying on the sale of inventory, which are typically the least liquid of a firm's current assets. Its equation is:
Mauya M.
Current assets is PHP2,000, current liabilities is PHP3,500. What is current ratio? Inventory is PHP150. Accounts payable is PHP450. Cash and accounts receivable total PHP800. What is the current ratio? Quick ratio? If current ratio is 1.7, what is the total accounts receivable if cash is PHP20,000, inventory is PHP7,500, and accounts payable is PHP30,000.
Breanna O.
Following are the particulars pertaining to Assets and Liabilities of a company 5000 equity shares $10 each 500000 8% 2000 pre shares $100 each 200000 9% 4000 Debentures of $ 100 each 400000 Reserves 300000 Creditors 150000 Bank overdraft 50000 Land & Building 500000 Plant & Machinery 600000 Debtors 200000 Stock 240000 Cash and Bank 5500 Prepaid expenses 5000. Q-1) Calculate current ratio. Q-2) Calculate Debt to equity ratio. Q-3) Liquid Assets do not include. a) Bills receivable b) Debtors c) Inventory d) Bank Balance. Q-4) Calculate Liquidity ratio.
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