Liquid Ratios Flashcards
What is the formula for Current Ratio?
Current Assets / Current Liabilities
What does the Current Ratio measure?
Solvency
What is the formula for Quick Ratio (Acid-Test Ratio)
(Current Assets - Inventory) / Current Liabilities
What does the Quick Ratio measure?
Immediate Liquidity
What is the formula for Cash Ratio?
Cash and Cash Equivalents / Current Liabilities
What does the Cash Ratio measure?
Cash Availability
What is the formula for Working Capital Ratio?
Working Capital / Total Assets
What does the Working Capital Ratio measure?
Operational Funds
What is the formula for Net Working Capital to Total Assets?
Net Working Capital / Total Assets
What does Net Working Capital to Total Assets measure?
Asset Utilization
What is the formula for Accounts Receivable Turnover Ratio?
Net Credit Sales / Average Accounts Receivable
What does the Accounts Receivable Turnover Ratio measure?
Collection Efficiency
What is the formula for Inventory Turnover Ratio?
COGS / Average Inventory
What does the Inventory Turnover Ratio measure?
Inventory Efficiency
