Submitted by: Submitted by pellin84
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Category: Business and Industry
Date Submitted: 05/22/2011 03:37 AM
SUMMARY OF FINANCIAL RATIOS
|Ratio |Method of Computation |Significance |
|Liquidity: | | |
|Current |Current assets |Measures short-term liquidity, the ability of a firm |
| |Current liabilities |to meet needs for cash as they arise. |
|Quick or |Current assets – inventory |Measures short-term liquidity more rigorously than the|
|acid-test |Current liabilities |current ratio by eliminating inventory, usually the |
| | |least liquid current asset. |
|Cash flow |Cash + marketable securities |Measures short-term liquidity by considering as cash |
|liquidity |+ cash flow from operating activities |resources (numerator) cash plus cash equivalents plus |
| |Current liabilities |cash flow from operating activities. |
|Average |Net accounts receivable |Indicates days required to convert receivables into |
|collection |Average daily sales |cash. |
|period | | |
|Days inventory |Inventory |Indicates days required to sell inventory....