1. Ratio Analysis
... the 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 ... have 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...
- Word Count: 1489
- Approx Pages: 6
- Has Bibliography
- Grade Level: High School