When you’re evaluating a potential investment, you likely look at profitability and growth, but there is one fundamental concept you must master first: liquidity. Just as a household needs enough cash ...

The quick ratio, also known as the acid-test ratio, measures a company's ability to pay off its current debt. Current debt includes any liabilities coming due within a year, like accounts payable and ...

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To address the negative impact of including the inventory in the current ratio, the quick ratio is measured by dividing the current assets minus the inventory by the current liabilities. The quick ...

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Liquidity ratios are key financial ratios used by internal and external analysts to gauge a company's liquidity, which represents its capacity to pay its existing short-term liabilities if it needs to ...

Financial ratios are calculations that compare two (or more) pieces of financial data that are normally found in a company's financial statements. Ratios can be invaluable to investors making ...

Liquidity ratios assess if a company can cover short-term debts with available assets. Key ratios include cash, quick, current, and operating cash flow ratios. A liquidity ratio over 1 suggests a ...

The current ratio is calculated by dividing a company’s current assets by its current liabilities. Ratios of 1 or higher indicate short-term solvency.

A quick ratio is a metric used to calculate a company's liquidity and how easily it could pay off its debts. A quick ratio works by providing a relatively fast assessment of a company's financial ...