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Key ratios - liquidity

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    Gabriel O.
    ML
    Gabriel O.

    Liquidity ratios shows the ability of a company to pay off both its current liabilities as they become due as well as their long-term liabilities as they become current. It shows the company cash level and tghe it’s ability to turn into cash other assets to pay off it’s liabilities and other obligations. It also shows how easy the company can raise cahs or turn assets into cash in a short term

    Wendy C.
    AU
    Wendy C.

    Liquidity is a firms abilities to meet its short term debts.

    Samuel F.
    ZA
    Samuel F.

    Liquidity ratios analyze the ability of a company to pay off both its current liabilities as they become due as well as their long-term liabilities as they become current. In other words, these ratios show the cash levels of a company and the ability to turn other assets into cash to pay off liabilities and other current obligations. Liquidity is not only a measure of how much cash a business has. It is also a measure of how easy it will be for the company to raise enough cash or convert assets into cash. Assets like accounts receivable, trading securities, and inventory are relatively easy for many companies to convert into cash in the short term. Thus, all of these assets go into the liquidity calculation of a company

    Harrison A.
    AT
    Harrison A.

    Key ratios - liquidity comparises of ;Current ratio , Quick or acid test ratio and Net working capital concept .The current ratio is coputed by dividing current assests by liabilities . Current assets includes; cash , marketable securities , accounts recceivable and inventories while current liabilities consist of accounts payable, short term notes payable , current maturities of long term, accrued income tax and other accrued expenses like wages . The Quick ratio or Acid test are typically the least liquid of frims current assets and assets on which losses are mostly likely to occur in the event of liquidation .Therefore this measures the firm's ability to pay off short term obligation without relying on the sales of inventories . Net working capital refers to the investment which a firm or organisation makes in short term assets. These includes; cash short term securities , accounts receivable and inventories .Thus the working capital ratio or concepts pre-supposes the effective use of these assets to ensure increased profitabilty in a firm .

    Harrison A.
    AT
    Harrison A.

    How do we derive Quick ratio / Acid test ?

    Zachary B.
    US
    Zachary B.

    What are key ratios - liquidity?

    Diamond T.
    US
    Diamond T.

    Liquidity ratios analyze the ability of a company to pay off both its current liabilities as they become due as well as their long-term liabilities as they become current. In other words, these ratios show the cash levels of a company and the ability to turn other assets into cash to pay off liabilities and other current obligations. Liquidity is not only a measure of how much cash a business has. It is also a measure of how easy it will be for the company to raise enough cash or convert assets into cash

    Douglas R.
    US
    Douglas R.

    Key ratios and liquidity.

    Ardian R.
    flag-default-icon
    Ardian R.

    The concept of cash cycle is also important for better understanding of liquidity ratios

    Erick V.
    PE
    Erick V.

    Comprensión y uso de información contable, no solo es la capacidad la empresa para cumplir con su obligaciones a largo plazo , si no también el dinero provisionado para enfrentar los gastos comunes obligaciones laborales e imprevistos

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