Please enable JavaScript.
Coggle requires JavaScript to display documents.
3.5.2 Ratio Analysis - Coggle Diagram
3.5.2 Ratio Analysis
-
Ratio
Acid test ratio
- A liquidity ratio that measures a firm's ability to meet its short-term debts
- It ignores stock because not all inventories can be easily turned into cash in a short time frame.
- Current assets - stocks/Current liabilities
Current Ratio
A short-term liquidity ratio that calculates
the ability of a business to meet its debts within the next twelve months.
-
Efficiency Ratio
Indicate how well a firm's resources have been
used, such as the amount of profit generated from the available capital used in the business.
They assess whether a business has sufficient cash or equivalent current assets to be able to pay its debts as they fall due
-
-
Liquidity - the ease and cost with which assets can be turned into cash and used immediately as a means of exchange