Evaluating the ability to pay current liabilities Flashcards
1
Q
Whats the computation for Working Capital?
A
Current assets - Current liabilities.
2
Q
What’s the computation for current ratio?
A
Total current assets/total current liabilities.
3
Q
What’s the computation for the cash ratio?
A
Cash + cash equivalents/Total current liabilities
4
Q
What the computation for the acid-test ratio?
A
Cash including cash equivalents + short-term investment + net credit receivables / total current liabilities.
