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Chapter 6 Liquidity - Coggle Diagram
Chapter 6 Liquidity
current ratio
assets > liabilities
indication
≥ 1, good
< 1, poor
quick ratio
test reliance on inventory
indication
≥ 1, strong
< 1, over reliance
gearing ratio
type
capital / financing
financial risk
possibility of losing $
NCL / (SC + reserve)
the :arrow_down: the better
interest cover ratio
operational
business risk
FC :arrow_right: future loss
contribution (before FC) / PBIT
the :arrow_down: the better
purpose
analyse capital structure
equity SC
long term financing
purpose
normal business operation
