Liquidity Ratios

Liquidity Ratios Liquidity Ratios are an important subgroup of financial ratios for business owners to understand and utilize in running their business. What are Liquidity Ratios? Liquidity ratios are formulas that put two numbers from your business’ Balance Sheet or...

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...

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...

Cash Ratio

Cash Ratio The Cash Ratio is a commonly used financial formula within the family of Liquidity Ratios . It divides cash holdings and near money by current obligations in order to determine how much of a company’s short-term debt can be...

Net Working Capital

Net working capital is less a liquidity ratio than a simple liquidity measure. Instead of division, net working capital assesses a company’s capacity to pay its current obligations by subtracting current obligations from current assets. Net Working Capital Formula: Net...