How to Make The Most of Your Liquidity - MoolahMore Cash Forecast

Moolahmore15 Sep, 2022Business

Traditionally, a company's liquidity ratio is calculated by dividing its current assets by the difference between assets and liabilities. This ratio can be a useful metric for analysts and financial experts to use when determining whether a company's financial position is stable enough to meet debt repayments and bills. The current ratio and the quick ratio are the two most commonly examined liquidity ratios. The current ratio compares a company's assets to its current liabilities. It reflects a company's ability to meet its short-term obligations. The quick ratio improves the ratio of total liquid assets to liabilities, ensuring a sophisticated level of fiscal efficiency. It is a more conservative measurement than the current ratio because it excludes inventory and a few other existing assets from the calculation.