ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Yes, I understand this from the notes
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No, I don’t understand this from the notes
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No, I don’t understand this, as I have not read the notes
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None of the above
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Detailed explanation-1: -Importance of Liquidity Ratio It helps understand the availability of cash in a company which determines the short term financial position of the company. A higher number is indicative of a sound financial position, while lower numbers show signs of financial distress.
Detailed explanation-2: -Liquidity is a measure of the cash and other assets banks have available to quickly pay bills and meet short-term business and financial obligations. Capital is a measure of the resources banks have to absorb losses.
Detailed explanation-3: -The working capital ratio is calculated simply by dividing total current assets by total current liabilities. For that reason, it can also be called the current ratio. It is a measure of liquidity, meaning the business’s ability to meet its payment obligations as they fall due.
Detailed explanation-4: -Also known as the acid test ratio or cash ratio, the quick ratio is a good indicator of your company’s short-term liquidity. It tells you how many times liquid assets could be used to pay down your debt.