Liquidity Ratio Definitions Flashcards
1
Q
Current ratio
A
Basic short-term liquidity
2
Q
Quick ratio
A
Thorough (next level) short-term liquidity
3
Q
Receivables turnover
A
Effectiveness of collections
Evaluates whether receivables balance is in excess
4
Q
Average collection period
A
Average number of days taken by an entity to collect its receivables
5
Q
Inventory turnover
A
Indicates the liquidity of inventory
Measures the number of times the inventory was sold on average during the period
