Liquidity Ratios Flashcards
1
Q
Working Capital
A
CA - CL
Yr 1: $715k - $695k = $20k
Yr 2: $665k - $700k = ($35k)
2
Q
Current Ratio
working capital ratio
A
CA / CL
Yr 1: $715k/695k = 1.03
Yr 2: $665k/$700k = 0.95
(industry average = 1.5)
3
Q
Acid-Test Ratio
A
(cash equivalents + marketable securities + A/R) / (CL)
industry average = 0.80
4
Q
Cash Ratio
A
(cash equivalents + marketable securities) / (CL)
