Liquidity Ratios Overview

These flashcards cover essential terms and concepts related to liquidity ratios, their calculations, and relevance in financial assessments.

Current Ratio

Current Assets / Current Liabilities

Quick Ratio

(Cash + marketable securities + receivables) / Current Liabilities

Cash Ratio

Cash and Cash Equivalents / Current Liabilities

Defensive Interval Ratio

(cash + marketable securities + receivables) / Daily Cash Expenditures

Cash Conversion Cycle

Days Inventory Outstanding + Days Sales Outstanding - Days Payable Outstanding

Cash + Short-term Marketable Investments + Receivables

This is used to calculate liquidity ratios and represents the liquid assets available to meet liabilities.

Daily Cash Expenditures

Total cash expenditures / number of days.

Burn Rate

Monthly Operating Expenses - Monthly Revenue.