مشاركة: Financial Ratios
Liquidity Ratios
Liquidity ratios access the firm’s ability to pay off their short term debt. To pay off short term debt a firm needs to be able to convert their currents assets into cash quickly. These ratios indicate a margin of safety. Liquidity ratios should be above 1 and preferably above 1.5. If the ratio is equal to or greater than 1 then the firm will likely be able to meet their short term obligations. If it happens to be below 1 then the firm is facing a liquidity problem and it is unlikely they will be able to meet there short term debt obligations.
The following ratios are covered in this tutorial:
Current Ratio
Quick Ratio (acid test ratio)
Cash Ratio
Operating Cash Flow Ratio