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Business > Liquidity Ratios, Gearing and Interest > Flashcards

Liquidity Ratios, Gearing and Interest Flashcards

1
Q

Current Ratio

A

Current Assets / Current Liabilities

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2
Q

Acid Test Ratio

A

Current Assets - Stock / Current Liabilities

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3
Q

Gearing Ratio

A

Fixed Cost Capital / Long term Capital

x 100

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4
Q

Interest Cover

A

Profit before Tax and Interest / Interest

Compares interest payments with profits, assesses risk

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