Home » Financial Statement Analysis » Liquidity Ratios

Financial Statement Analysis

- Liquidity Ratios
- Cash Ratio
- Cash Ratio Formula
- Quick Ratio
- Quick Ratio Formula
- Current Ratio
- Current Ratio Formula
- Acid Test Ratio Formula
- Defensive Interval Ratio
- Working Capital Ratio
- Working Capital Formula
- Net Working Capital Formula
- Changes in Net Working Capital
- Cash Flow from Operations Ratio
- Cash Reserve Ratio
- Operating Cycle Formula
- Current Ratio vs Quick Ratio
- Bid Ask Spread
- Liquidity vs Solvency
- Liquidity
- Solvency
- Solvency Ratios
- Equity Ratio
- Capital Adequacy Ratio
- Liquidity Risk
- Altman Z Score

Liquidity ratio analysis provides us with an understanding that whether the company will be able to serve its short-term liabilities (current liabilities) with the help of its short-term assets (current assets). This helps an analyst understand whether the company has enough cash in the system to survive for atleast one operating cycle. Liquidity Ratios types include current ratios, quick ratio, cash ratio, defensive interval ratio and working capital ratio.

Cash ratio is the most common type of liquidity ratio that measures the liquidity of the company and considers only the Cash and Cash Equivalents.

Explore this ResourceQuick ratio is a liquidity ratio which is used as a measure of the ability of the company to meet its current obligation.

Explore this ResourceQuick Ratio formula is a more stringent measure of short-term liquidity as compared to Current Ratio.

Explore this ResourceThe current ratio is a type of liquidity ratio that measures current assets relative to current liabilities thereby helping the investor to know how liquid a firm is.

Explore this ResourceThe current ratio is calculated because the investor wants to know how liquid a firm is.

Explore this ResourceDefensive Interval Ratio is used in judging the liquidity of the company.

Explore this ResourceWorking Capital Ratio is used to measure a company’s financial health.

Explore this ResourceWorking capital formula (WC) is one of the most common concepts every business owner should understand. To find out how liquid a firm is at any given moment of time.

Explore this ResourceNet working capital (NWC) determines the short terms liquidity of a company.

Explore this ResourceCurrent Ratio and Quick ratio are liquidity ratio formulas and are extremely helpful to Financial Statement Analysis.

Explore this ResourceBid Ask formula is used to find out the difference between the price the sellers ask and the price the buyers bid for.

Explore this ResourceLiquidity can be defined as a firm’s ability to meet the current liabilities of the current assets it has. Solvency, on the other hand, can be defined as the ability of the company to run its operations in the long run.

Explore this ResourceLiquidity analysis is the ability of the firm to pay off the current liabilities with the current assets it possesses.

Explore this ResourceSolvency is the ability of the firm to continue its operations for a long period of time.

Explore this ResourceThe term ‘Liquidity Risk’ means ‘Cash Crunch’ for a temporary or short-term period.

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