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Series: Ratio Analysis (3
post )
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Q. Can the business pay its bills ?
Quick Ratio or Acid Test:
This ratio is used to check if a
Company has enough Cash & Cash Equivalents to meet its current obligations
or Liabilities’ quick Ration of 0.5 means a company is ready to pay off half of its Liabilities instantaneously.
Qucik Ration differs from Current
ratio ,The Current Assets that are not readily convertible into cash are
excluded from the Calculation
Formula :
Quick
ratio = (current assets – inventories) / current liabilities Or
(cash and equivalents + marketable securities + accounts receivable) /
current liabilities
Example:
Go to
Moneycontrol.com Website here is
an Online Link for the same
http://www.moneycontrol.com/financials/relianceindustries/ratios/RI#RI select the Ratios under the Financials
Tab & look for the Liquidity
And Solvency Ratios
Next Post on Beginning Investing: Liquidity Measurement Ratios ( Cash Ratio )
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