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Determine Current ratio or working capital ratio
CA = Current assets/Current liabilities (times)
Current ratio measures the short term solvency or liquidity; it demonstrates the extent to which the claims of short-term creditors are covered by assets. Current ratio is fundamentally looking at working capital of company. Effective management of working capital ensures the organisation is running efficiently. This will finally result in increased profitability and positive cash flows. Effective management of working capital includes low investment in non-productive assets such as inventory, trade receivables and current account bank balances. Also maximum use of free credit facilities like trade payables ensures efficient management of working capital.
Normal current ratios around 2:1 though this varies within different industries. Low current ratio can indicate insolvency. High ratio may indicate not maximising return on working capital. Valuation of inventories would have an effect on the current ratio, as will year end balances and seasonal fluctuations.
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applicablility of operating cycle of broilers[poultry] in uganda
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1. The standard approach here is to calculate some conventional ratios. These ratios can afterwards be used along with regression analysis to estimate the default probability.
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APPLICABILIYI OF THE OPERETING CYCLE
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Q. What do you mean by Public deposits? Public deposits are the fixed deposited by the business enterprises directly from the company. This source of the raising the short term
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