Liquidity Ratios

Liquidity Ratios
Leverage Ratios Leverage Ratios are a valuable family of financial ratios that business owners should understand and use when analyze the performance of their business. What are Leverage Ratios? Leverage ratios are formulas that put two numbers from your business’...
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Current Ratio
The Current Ratio is a useful financial formula within the family of Liquidity Ratios. It juxtaposes a company’s current assets and current obligations. This produces a number that reflects whether a business is able to cover its short-term debt with...
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Quick Ratio
The Quick Ratio, sometimes called the “Acid-Test Ratio,” is a useful financial formula within the family of Liquidity Ratios. It juxtaposes a company’s quick assets and current obligations. This produces a number that reflects whether a business is able to...
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Cash Ratio
“For better or worse, cash is the oxygen of your business, and you can’t last long in any environment without it.”  – Neil Blumenthal What is the cash ratio? Measures a business’s ability to pay its current liabilities (due within one...
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Net Working Capital
“Capital is that part of wealth which is devoted to obtaining further wealth.” – Alfred Marshall What is net working capital? Measures a business’s ability to pay its current liabilities (due within one year) using current assets without obtain external funding....
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