Liquidity (Edexcel A-Level Business): Flashcards
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Practise the cards
10 cards from this deck
Liquidity measures
Liquidity measures
Ability to meet short-term debts & financial obligations
Most liquid asset
Most liquid asset
Cash
Working capital (definition)
Working capital (definition)
Money available for day-to-day trading operations
Fundamental accounting equation
Fundamental accounting equation
Assets = Capital + Liabilities
Current assets timeframe
Current assets timeframe
Converted into cash within 12 months
Current liabilities timeframe
Current liabilities timeframe
Debts repaid within one year
Current ratio formula
Current ratio formula
Current assets ÷ Current liabilities
Healthy current ratio range
Healthy current ratio range
1.5:1 to 2:1
Acid test ratio formula
Acid test ratio formula
(Current assets - Inventories) ÷ Current liabilities
Healthy acid test ratio
Healthy acid test ratio
At least 1:1