Wonderful Liquidity Ratios Analysis And Interpretation
Interpretation of financial ratios.
Liquidity ratios analysis and interpretation. The percentage of gross profit to sales or the working capital ratio. Solvency check tells about the ability of the company to continue running its operations for the long term Read more. While liquidity ratios focus on a firms ability to meet short-term.
Liquidity ratio analysis is the use of several ratios to determine the ability of an organization to pay its bills in a timely manner. A liquidity ratio is used to determine a companys ability to pay its short-term debt obligations. Liquidity ratio tells about how well placed is the company to pay-off its short term debts like current liabilities.
The liquidity ratio then is a computation that is used to measure a companys ability to pay its short-term debts. Liquidity ratios are financial ratios that measure a companys ability to repay both short- and long-term obligations. The current ratio also known as the working.
The current ratio Current Ratio Formula The Current Ratio formula is Current Assets Current Liabilities. The three main liquidity ratios are the current ratio quick ratio and cash ratio. When analyzing a company investors and creditors want to see a company with liquidity ratios above 10.
A solvent company is one that owns more than it owes. Introduction As a manager you may want to reward employees based on their performance. Common liquidity ratios include the following.
Financial ratio analysis A reading prepared by Pamela Peterson Drake O U T L I N E 1. Liquidity Gearing Profitability Efficiency Liquidity-Liquidity is the extent to which a business can meet its financial commitments in the short-term less than 12 months-To assess a businesss liquidity its managers. Commercial banks and other short-term creditors are generally interested in such an analysis.