Quick Ratio Flashcards
1
Q
Another name for Quick Ratio?
A
ACID test
2
Q
ACID test
A
Another name for Quick Ratio?
3
Q
How to calculate quick ratio?
A
(Current assets - inventories) / liabilities
4
Q
(Current assets - inventories) / liabilities
A
How to calculate quick ratio?
5
Q
Purpose of quick ratio?
A
How well current liabilities are covered by cash
6
Q
How well current liabilities are covered by cash
A
Purpose of quick ratio?
7
Q
How does inventory take time?
A
Inventory takes time to sell and convert into liquid assets
8
Q
What quick ratio do companies like?
A
1:1
9
Q
1:1
A
What quick ratio do companies like?
10
Q
Why do firms with less than 1:1 be okay?
A
As it means they can turn their inventories over quickly
11
Q
As it means they can turn their inventories over quickly
A
Why do firms with less than 1:1 be okay?
