Posts Tagged ‘quick ratio’

Importance of Liquidity

In my last three posting, Necessity of Working Capital, The Current Ratio Matters and Quick Ratio Analysis we looked at three ways to asses a company’s liquidity. While working capital, the current ratio, and the quick ratio are useful liquidity measures, they may need some refinement. Let’s dig a little deeper and try to understand more about the importance of liquidity and why just the basic calculation of any of these may not be as helpful as we may have first thought. Read the rest of this entry »


Quick Ratio Analysis

In the postings Necessity of Working Capital and The Current Ratio Matters we looked at the importance of having adequate working capital and a couple of ways of assessing a company’s working positions. In addition to the actual dollar amount of working capital and the current ratio, there is another liquidity measure, the Quick Ratio.

Quick Ratio

The quick ratio analysis is a way to look at liquidity that is a little more stringent in what are considered liquid assets. Unlike the current ratio that includes all current assets in the calculation of the ratio, the quick ratio Read the rest of this entry »


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