|liquidity ratio definition personal finance||1.58||0.3||6051||83|
The ratio used to measure the ability of a company to pay its short-term liabilities with the short-term assets is called as the current or liquidity ratio. It is calculated by dividing the current assets with the current liabilities.What is the financial ratio used to assess a company liquidity?
The most basic of the liquidity ratios is the current ratio, also called the working capital ratio. The current ratio equals a company's current assets divided by its current liabilities.Is there a downside to having a high liquidity ratio?
In a business, too much liquidity may indicate you are spending too little on research and development . If you do not create new revenue streams and your existing revenue declines due to normal demand curves and product life cycles, you will likely lose market share .How do you calculate assets to liabilities ratio?
To calculate the debt to assets ratio, divide total liabilities by total assets. The formula is: Total liabilities ÷ Total assets A variation on the formula is to subtract intangible assets (such as goodwill) from the denominator, to focus on the tangible assets that were more likely acquired with debt. For example,...