Liquidity Ratios
- Justin Holm
- Jul 2, 2020
- 1 min read
Updated: Aug 12, 2020
The primary goal of these ratios is to see how easily a company can pay its upcoming debts.
Cash Ratio: Is a measure of how easily the company pay their upcoming debts out of cash. (Cash divided by Total Current Liabilities)
Current Ratio: Similar to the above but broadens the assets to cover those that are likely liquid (Total Current Assets divided by Total Current Liabilities)
Cash ratio = Cash and Cash equivalents / Current Liabilities
Operating cash flow ratio = Operating cash flow / Current liabilities
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