Quick Ratio: Quick ratio, also known as acid-test ratio, is a liquidity ratio that measures a company’s ability to pay off its short-term liabilities using its most liquid assets. It is calculated by dividing the total liquid assets by total current liabilities. Liquid assets are assets tha...
A current ratio greater than 1 indicates that the company has more current assets than current liabilities, suggesting good short-term financial health and the ability to cover its short-term obligations. Quick ratio (Acid-Test ratio) The quick ratio, also known as the acid-test ratio, ...
The higher the ratio, the better the company’s liquidity position. Quick Ratio or: The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets and therefore excludes inventories from its current assets. It is also known as the “acid...
Current Ratio:The current ratio, also known as the working capital ratio, compares a company’s current assets to its current liabilities. It is calculated by dividing current assets by current liabilities. This ratio measures a company’s ability to cover short-term obligations using its readily ...
While the current ratio is also referred to as a liquidity ratio, a company with the majority of its current assets in inventory may or may not have the liquidity needed to pay its liabilities as they come due. Its liquidity depends on the speed in which the inventory can be converted to...
The quick ratio is also known as the liquid Ratio or acid-test Ratio, which indicates the short-term paying capacity of the enterprise. This is the reason why the Ratio includes the liquid assets exclusively. One thing to note is that while calculating the acid test ratio, the current asset...
Current RatioThe current ratio, also known as the working capital ratio, measures the business’ ability to pay off its short-term debt obligations with its current assets.The formula for calculating the current ratio is as follows:Current Ratio = Current Assets / Current Liabilities...
and M. Kruidhof (2013) Modelling the liquidity ratio as macroprudential instrument. Journal of Banking Regulation 14(2) pp.91-106.Van Den End, JW., Kruidhof, Mark., Modelling the liquidity ratio as macroprudential instrument. Journal of Banking Regulation, 14, 2013, 91-106....
The ratio which measures the capability of a firm to meet its current obligation is known as liquidity ratio. This ratio derived its name from ‘liquidity’ referring to ‘the cash deposits available’. As a result, liquidity ratios are helpful in determining the firm’s ability to meet its ...
Quick ratio – Also known as the acid-test ratio, the quick ratio looks at whether you’re able to pay off your liabilities with quick assets, which are assets that you can convert to cash within the space of 90 days. As such, the quick ratio is a great indicator of short-term liqu...