liquiditry ratios

Question 1

current ratio ratio formula and definition

Answer 1

current assets/ current liabilities

answers if company can pay short tem bills

Question 2

quick ratio ratio formula and definition

Answer 2

cash+marketable securities +receivables / curr. liabilities

more stringent than current becasue does not include inventories and other non liquid assets

Question 3

what does a higher quick ratio mean?

Answer 3

company will be more likely to pay short turn bills

Question 4

cash ratio ratio formula and definition

Answer 4

cash + marketable securites / curr. liabilities

Question 5

defense intervale ratio formula and definition

Answer 5

cash +marketable securities+ receivables / ave daily expenditures
indicates # of days ave cash expenditures firm can pay with current liquid asset