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Financial Analysis Fundamentals > Liquidity Analysis > Flashcards

Liquidity Analysis Flashcards

1
Q

Is it better for a liquidity ratio to be high or low?

A

Higher

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2
Q

Current Ratio

A

Current Assets/Current Liabilities - Shows how a company can maximize the liquidity of its current assets to settle debt and payables

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3
Q

Quick Ratio

A

Current Assets - Inventory/Current liabilities - measures ability to pay short term liabilities by liquid assets

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4
Q

EBITDA to Interest Ratio

A

EBITDA/Interest Expense - Assesses company’s ability to cover interest payments with earnings before interest, taxes, deprecaition, and amortization.

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Financial Analysis Fundamentals (6 decks)

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