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AUD CPA 1 > Liquidity Ratio: Measures Co. Short term ability to pay its maturing obligations > Flashcards

Liquidity Ratio: Measures Co. Short term ability to pay its maturing obligations Flashcards

1
Q

Working Capital

A

Current Assets-
Current Liabilities

*Measures Company’s solvency

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2
Q

Current Ratio

A

Current Assets /
Current Liabilities

Measures short term debt pay ability

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3
Q

Quick or Acid test ratio

A

cash, marketable sec, and rec (net) / Current Liabilities

Measures immediate short term liquidity

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4
Q

Current Cash debt coverage ratio

A

Net cash provided by operating activities / Avg CL

Measures company’s ability to pay off its CL in a given year from its operations

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AUD CPA 1 (9 decks)

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