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      • The liquid ratio, also known as quick ratio or acid test ratio, is an important component of the ratio analysis, which determines the capability of the firm to pay off its short term debts or obligations. It compares the current assets of with the current liabilities of the firm.
  1. Jan 24, 2023 · Acid Test Ratio/Liquid Ratio/Quick Ratio is a measure of a company’s immediate short-term liquidity. It is calculated by dividing liquid assets by current liabilities. Liquid assets can be termed as those assets which can almost immediately be converted to cash or an equivalent. Unlike the current ratio, this doesn’t take into account inventories and prepaid expenses since both of them can’t be seen as liquid assets.

  2. Jan 23, 2023 · Super Quick Ratio or Cash Ratio. This ratio goes one step ahead of current ratio , liquid ratio & is calculated by dividing super quick assets by the current liabilities of a business. It is called super quick or cash ratio because unlike other liquidity ratios it only takes into account “super quick assets”. This is the most stringent test of a business’ current liquidity situation.

  3. Jan 23, 2023 · Liquidity ratios measure a company’s ability to meet its short-term financial obligations. Examples include the current ratio, quick ratio and cash ratio. Profitability ratios measure a company’s ability to generate profits from its operations. Examples include the gross profit margin, operating margin and net profit margin.

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  5. Jan 25, 2023 · Debt to equity ratios measure a company’s ability to finance their operations by taking debt and using shareholders’ equity. This ratio helps determine the amount of debt a company has relative to its equity and evaluates the leverage of the organization. Common debt to equity ratios include the total debt to equity ratio and the equity debt ratio.

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