A class of ratios that measures the ability of a firm to cover its current obligations (liabilities).
It should be realised that ratio's are static, rather like the balance sheet, and should only be used to discern trends. Current (working capital) ratio is a guide to financial safety in that it shows how many times current assets will cover current liabilities. It is expressed as Current assets divided by current liabilities The ‘acid test' ratio reveals the capability of a business to repay current obligations immediately, and is calculated as: Cash and marketable securities and debtors divided by current liabilities In some cash based businesses, the cash ratio may be a better guide. This is practically the same as above, but excludes debtors.
Ratio which determines how much of a companies current assets are available to meet short term creditor's claims.
Measures the firm's ability to meet maturing short-term obligations. Includes current ratio and quick ratio.
Measures of a firm's ability to meet its immediate debts; used to analyze the risks of investing in the firm.
A ratio that measures a company's ability to pay off short-term debt as it becomes due. The main ratios of this type are the current ratio (Current Assets divided by Current Liabilities) and the quick ratio (Current Assets less inventory divided by Current Liabilities).
measurements of an organization's ability to generate cash.
Financial ratios that measure a company's ability to meet its maturing short-term obligations.
Ratios that show the relationship of a firm's cash and other current assets to its current liabilities.
There are various accounting ratios that relate to the financial resources of a business. These are known as liquidity ratios. The main two statistics are the current ratio and the acid test ratios which measure the relationship between current assets and current liabilities.
Financial ratios such as current ratio, quick ratio, receivables turnover ratio, and inventory turnover ratio. To learn more, see Explanation of Financial Ratios. To Top
Ratios that measure a firm's ability to meet its short-term financial obligations on time.
See acid test, current ratio and quick ratio.
