Liquidity ratio
Liquidity represents the quality of the assets to be reborn into cash without loss of its value. It is said that an assets is more liquid than different depending on the ease and speed with which this enkindle be sold. therefrom the roughly liquid asset is the money (notes and coins).
The liquidity ratio is a kind of financial measures to analyse accepted and late(prenominal) state of the caller-out and which determines whether the company can pay its original liabilities. It is very important that the company very quickly sound short-term assets into cash to cover debts owed to creditors.
Some analysts will aspire only the sum of cash and equivalents divided by current liabilities because they feel that they are the most liquid assets, and would be the most likely to be used to cover short-term debts in an emergency.
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* menstruum ratio
The menses ratio calculated if the company has the resources needed to pay its debts within the next 12 months. The assets polish this that the company has divided the debts it owes to its creditors.
online ratio = Current Assets ÷ Current Liabilities
For the company does not have problems paying their debts in the short-term result should be above 1. If it happens otherwise the company can not pay their debts before 12 months.
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Acid Test (Quick ratio)
The Quick ratio is an indicator similar to the Current ratio, although this is more efficient to calculate the companys immediate ability to address short-term financial obligations. Sometimes, it is difficult to fling off inventory, therefore, the asset is subtracted before calculating the inventory.
Quick ratio = (Current assets stock) ÷ Current liabilities
Potential creditors use this ratio because it reveals a companys ability to pay in the worst...If you want to get a full essay, order it on our website: Orderessay
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