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  • Liquidity: Cash Expenses Per Day 365

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    sailee sharma
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    This document discusses four liquidity ratios used to assess short-term solvency: 1) the current ratio, which measures current assets to current liabilities; 2) the quick ratio, which measures quick assets (current assets less inventories) to current liabilities; 3) the absolute cash ratio, which measures cash and marketable securities to current liabilities; and 4) the cash ratio, which measures the number of days a company can continue operating using only cash on hand. These ratios help evaluate a company's ability to pay off short-term debts using its current assets.

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    This document discusses four liquidity ratios used to assess short-term solvency: 1) the current ratio, which measures current assets to current liabilities; 2) the quick ratio, which measures quick assets (current assets less inventories) to current liabilities; 3) the absolute cash ratio, which measures cash and marketable securities to current liabilities; and 4) the cash ratio, which measures the number of days a company can continue operating using only cash on hand. These ratios help evaluate a company's ability to pay off short-term debts using its current assets.

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    © All Rights Reserved
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    6 views1 page

    Liquidity: Cash Expenses Per Day 365

    Uploaded by

    sailee sharma
    This document discusses four liquidity ratios used to assess short-term solvency: 1) the current ratio, which measures current assets to current liabilities; 2) the quick ratio, which measures quick assets (current assets less inventories) to current liabilities; 3) the absolute cash ratio, which measures cash and marketable securities to current liabilities; and 4) the cash ratio, which measures the number of days a company can continue operating using only cash on hand. These ratios help evaluate a company's ability to pay off short-term debts using its current assets.

    Copyright:

    © All Rights Reserved
    Download as ODT, PDF, TXT or read online from Scribd
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    of 1

    A.

    LIQUIDITY RATIOS - Short Term Solvency


    Formula
    Ratio
    1.

    Current Assets
    Current Liabilities

    Current Ratio

    Quick Assets
    Quick Liabilities

    2. Quick Ratio or Acid


    test ratio

    3. Absolute Cash Ratio

    4. Interval Measure

    (Casb+Marketable
    Securities)
    Current Liabilities

    Numerator
    Inventories
    + Debtors
    + Cash & Bank
    + Receivables / Accruals
    + Short terms Loans
    + Marketable Investments

    Denominator
    Sundry Creditors (for goods)
    + Outstanding Expenses (for services)
    + Short Term Loans &Advances (Cr.)
    + Bank Overdraft / Cash Credit
    + Provision for taxation
    + Proposed or Unclaimed Dividend

    Abi
    term

    Current Liabilities

    Abi

    Bank Overdraft
    Cash Credit

    liabi

    Current Assets
    Less : Inventories
    Less : Prepaid Expenses

    Cash in Hand
    + Balance at Bank (Dr.)
    + Marketable Securities &
    short term investments

    Quick Assets
    Current Assets
    Less
    : Inventories
    Cash Expenses Per Day
    Less :

    Prepaid Expenses

    Less :
    Less :

    com
    Solv
    Rati
    curr

    Sundry Creditors (for goods) Ava

    + Outstanding Expenses (for services) term


    + Short Term Loans &Advances (Cr.)
    + Bank Overdraft / Cash Credit
    + Provision for taxation
    + Proposed or Unclaimed Dividend

    AaattalCashExpenses
    365
    Cash Expenses = Total Expenses less

    Depreciation and write offs.

    Abil
    expe

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