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You have to calculate the Quick ratio and the Current Ratio

Quick ratio: (cash+accounts receivables+short-term investments)/current liabilities

Current ratio: Current Assets/Current liabilities

Whoever submitted this did not answer the question fully. I don't know the answer but I see nothing here that says "Liquidity ratio =" or means the same thing. I have no idea what to do with quick ratio and current ratio....

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What Does Liquidity Ratios Mean?

A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.

Common liquidity ratios include the current ratio, the quick ratio and the operating cash flow ratio. Different analysts consider different assets to be relevant in calculating liquidity. Some analysts will calculate only the sum of cash and equivalents divided by current liabilities because they feel that they are the most liquid assets, and would be the most likely to be used to cover short-term debts in an emergency.

A company's ability to turn short-term assets into cash to cover debts is of the utmost importance when creditors are seeking payment. Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to determine whether a company will be able to continue as a going concern.

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Is it true that a ratio is a rate?

No. It can be but need not be. For example, you might calculate the ratio of today's temperature in Celsius and in Fahrenheit and calculate the ratio. That is not a rate.


How to get a ratio?

calculate the ratio between proton&electron


What is the meaning of liquidity ratio?

It is the amount which a bank has to maintain in the form of cash, gold or approved securities. it is presently 25%.


What is a healthy liquidity ratio?

A healthy liquidity ratio typically indicates a company's ability to meet its short-term obligations and is often measured using the current ratio or quick ratio. A current ratio of 1.5 to 2 is generally considered healthy, suggesting that the company has 1.5 to 2 times more current assets than current liabilities. The quick ratio, which excludes inventory from current assets, is usually considered healthy if it is above 1. These ratios help assess financial stability and operational efficiency.


What is a liquid ratio?

The liquid ratio, also known as the quick ratio, is a financial metric that measures a company's ability to meet its short-term liabilities using its most liquid assets. It is calculated by dividing liquid assets, such as cash and accounts receivable, by current liabilities. A ratio greater than 1 indicates that a company can cover its short-term obligations, while a ratio less than 1 may signal liquidity issues. This metric provides a more conservative view of liquidity compared to the current ratio, as it excludes inventory from assets.

Related Questions

How do you calculate Bank liquidity ratio?

Cash and near cash/Customers deposit and other current liabilities


How do you calculate statutory liquidity ratio?

If last fridaday of the Second preceding fortnight is 01.06.2012, the SLR is being maintained w.e.f 16.06.2012


Current ratio and liquidity ratio are same?

no they are not the same. the current ratio is current assets/current liabilities. but liquidity ratio or acid test ratio is current assets - stock/current liabilities. liquidity ratio shows you how able a business is to pay off its debt when stock is taken out of the equation.


How does the current ratio relate to the other liquidity ratios?

The current ratio is a key liquidity ratio that measures a company's ability to cover its short-term liabilities with its short-term assets. It complements other liquidity ratios, such as the quick ratio and cash ratio, by providing a broader view of liquidity. While the current ratio includes all current assets, the quick ratio excludes inventory, and the cash ratio focuses solely on cash and cash equivalents. Together, these ratios offer a comprehensive assessment of a company's short-term financial health and liquidity position.


An example of liquidity ratio is the?

current ratio and acid test ratio are examples of liquidity ratios'. current ratio is current asset's/ current liabilities. acid test ratio is current assets- stock / current liabilities.


What is the purpose of the liquidity ratio?

Liquidity ratios measure the availability of cash to pay debt


Last year MBA 1 st sem quction 2005 to 2008?

What ratio would you calculate to assess liquidity and solvency position of a company ?


What is the financial ratio used to assess a company's liquidity?

The quick ratio which equals total assets/total liabilities Answer: Liquidity Ratios are the ratios that can be used to measure the liquidity of a company. As a rule of the thumb, all companies must have good liquidity ratios. The four main ratios that fall under this category are: 1. Current Ratio or Working Capital Ratio 2. Acid-test Ratio or Quick Ratio 3. Cash Ratio 4. Operation Cash-flow ratio


What is current Statutory Liquidity Ratio?

25%


Full form of SLR?

Statutory liquidity ratio


What is CLR rate of bank?

cash liquidity ratio


What is the slr ratio for bank?

SLR stands for Statutory Liquidity Ratio. Statutory Liquidity Ratio is the amount of liquid assets, such as cash, precious metals or other approved securities, that a financial institution must maintain as reserves other than the Cash with the Central Bank. The statutory liquidity ratio is a term most commonly used in India.