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Financial Gap Calculation

The document describes how to calculate a company's financial gap by comparing current assets and current liabilities, fixed assets and total liabilities, and total assets and total liabilities to measure solvency, liquidity, and leverage.

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Roberto F Chedid Filho
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124 views1 page

Financial Gap Calculation

The document describes how to calculate a company's financial gap by comparing current assets and current liabilities, fixed assets and total liabilities, and total assets and total liabilities to measure solvency, liquidity, and leverage.

Uploaded by

Roberto F Chedid Filho
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Financial Gap Calculation

% of % of
Sales* Sales*
Financial
Cash Notes Payable
Gap
Accounts Receivable Accounts Payable

Inventory Accruals

Total Current Assets Total Current Liabilities

Equipment Long-Term Liabilities

Land/Building Total Liabilities

Total Fixed Assets Net Worth


(old Net Worth* = 286,000)
Total Liabilities &
Total Assets
Net Worth

Derivation Definition
SOLVENCY Measures solvency:
Current Ratio the company’s ability to pay its bills.
Current Assets
Current Liabilities

LIQUIDITY Measures liquidity:


Quick Ratio Cash + Accts. Rec. the company’s ability to generate cash to
(or acid test ratio)
Current Liabilities pay bills without relying on the sale of
inventories.

LEVERAGE Measures the company’s ability yo


Debt-to-Net Worth Total Liabilities withstand adversity:
Net Worth shows the riskiness of the company

copyright 2008 Business Resource Services

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