Difference between revisions of "Liquidity ratios"
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| − | [[Liquidity ratios]] are two ratios, [[current ratio]] and [[acid test ratio]], which measure a company’s ability to pay off short-term debts. | + | [[Liquidity ratios]] are two ratios, [[current ratio]] and [[acid test ratio]], which measure a company’s ability to pay off short-term debts. A [[liquidity ratio]] refers to one of the two ratios. |
Latest revision as of 10:58, 27 November 2023
Liquidity ratios are two ratios, current ratio and acid test ratio, which measure a company’s ability to pay off short-term debts. A liquidity ratio refers to one of the two ratios.
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Liquidity ratios. The two ratios -- current ratio and acid test ratio -— which measure a company’s ability to pay off short-term debts.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Liquidity ratios. Ratios that show the relationship of a firm's cash and other current assets to its current liabilities.
According to the Strategic Management by David and David (15th edition),
- Liquidity ratios. The current ratio and quick ratio measure a firm's ability to meet short-term cash obligations.
Related concepts
- Accounting (alternatively known as accountancy) is management of financial data, information, and knowledge about financial transactions of legal entities. Accountancy tends to include bookkeeping and, depending on a particilar enterprise, may also include quatitative analysis of financial data in the bookkeeping system and/or business intelligence.
