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Business theme 2 > liquidity > Flashcards

liquidity Flashcards

1
Q

liquidity

A

The ability of a business to find the cash to pay its bills

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2
Q

Causes of cash flow problems

A

-Low profits or losses
-Excess inventory held
-Too much production capacity
-Overtrading

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3
Q

Current ratio

A

Current assets/current liabilities

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4
Q

Acid test ratio

A

Current assets-inventory/current liabilities
-Significantly less than 1 is bad

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Business theme 2 (4 decks)

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