The Quick Ratio Thequick ratiomeasures 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 theacid-testratio: Quick ratio=C+MS+ARCLwhere:C=cash & cash equivalentsMS=marketable securit...
The Quick Ratio Thequick ratiomeasures 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 theacid-testratio: Quick ratio=C+MS+ARCLwhere:C=cash & cash equivalentsMS=marketable securit...
The term “Acid-test ratio” is also known as quick ratio. The most basic definition of acid-test ratio is that, “it measures current (short term) liquidity and position of the company”. To do the analysis accountants weight current assets of the company against the current liabilities whi...
The current ratio is also known as the working capital ratio. It will measure the relationship between current assets and current liabilities. It measures the firm’s ability to pay for all its current liabilities, due within the next one year by selling off all their currentassets. The formul...
A higher current ratio indicates a better ability to meet short-term obligations. 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...
Current Ratio may be defined as the ratio of current assets to current liabilities. It is also known as Working Capital Ratio or 2:1 Ratio. It shows the relationship between the total current assets and total current liabilities, expressed as formula given below: ...
Current Ratio The current ratio, also known as the working capital ratio, measures the business’ ability to pay off itsshort-term debtobligations with its current assets. The formula for calculating the current ratio is as follows: Current Ratio = Current Assets / Current Liabilities ...
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...
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 insurance will only give an amount equivalent to the replacement cost ($500,000) multiplied by the ratio (0.75) minus deductible ($5,000). So the amount covered by the insurance is only $370,000 (500,000 x 0.75 = 375,000 – 5,000 = 370,000). You will also get a coinsurance...