Liquidity Flashcards
1
Q
Current ratio
A
Current Assets : Current Liabilities
2
Q
Acid Test ratio
A
(Current assets - Inventory) : Current liabilities
Or
(Trade & other receivables + Cash & cash equivalents) : Current liabilities
Inventory = Trading inventory + Consumables on hand
3
Q
Net working capital
A
Current assets - current liabilities
4
Q
Stock turnover rate
A
Cost of sales / average trading stock
5
Q
Stock holding period
A
(Average trading stock / cost of sales) * 365 or 12
6
Q
Average debtors collection period
A
(Average debtors / credit sales) * 365
7
Q
Average creditors payment period
A
(Average creditors / credit purchases) * 365
