Accounting ratios (Liquidity and Activity Ratios) Flashcards
1
Q
Current(Working Capital Ratio)
A
Current Assets: Current Liabilities
2
Q
Acid Test Ratio
A
Current Assets - Stocks: Current Liabilities
e.g) if 1:5:1
for every one euro in short term debt we have $1.5 in liquid assets
3
Q
Stock Turnover
A
Cost of Sales / Average stock
4
Q
Debtors collection period
A
Debtors / Credit Sales x 12
5
Q
Creditors Collection Period
A
Creditors / Credit Purchases x 12
