1. Ratio Analysis
... balance sheet. Firms that are termed liquid generally have enough cash to pay their upcoming payments. These ratios are the working capital, current ratio, and the acid-test ratio. The working capital ratio should Ideally, they should be 2.0 and 1.0 respectfully, but being lower could mean that the company is trying to reduce the ... a lot of meaning. It is the trend of this ratio over time that is significant is judging the firms ability to pay its bills. Acid-test Ratio The acid-test ratio is a better, more conservative measure of liquidity. It basically shows whether or not a firm can ...
- Word Count: 1489
- Approx Pages: 6
- Has Bibliography
- Grade Level: High School