What is liquidity ratios, Managerial Accounting

Assignment Help:

Liquidity ratios

Liquidity refers to the ability of concern to meet its current obligations as and when these become due. The short term obligations are met by realizing amounts from current floating or circulating assets. The current assets should either be liquid or near liquidity. These should be convertible into cash for paying obligations of short term nature.

The sufficiency or insufficiency of current assets should be assessed by comparing term with short term (current) liabilities. If current assets can pay off current liabilities then liquidity position will be satisfactory. On the other hand if current liabilities may not be easily met out of current assets then liquidity position will be bad.

 


Related Discussions:- What is liquidity ratios

Operating cycle method, Operating Cycle Method In this way, total opera...

Operating Cycle Method In this way, total operating expenses for a period are divided via the number of operating cycles in the relevant period to compute the cash need for wor

Negotiated prices-transfer pricing methods, Negotiated prices Where mar...

Negotiated prices Where market based prices are not applicable, it has been argued that allowing managers to bargain with each other in order to establish transfer prices devel

Costing and Budgetory Control, Given budgeted figures and actual, then anal...

Given budgeted figures and actual, then analyses each fixed cost into its components

Gather data about alternatives, Gather Data about Alternatives When pot...

Gather Data about Alternatives When potential areas of activity are specified, management must assess the potential growth rate of the activities, the capability of the company

Computation of working capital required, Computation of Working Capital Req...

Computation of Working Capital Required 1. Operating Cycle Period = M+W+F+D-C     = 101.38 +2

Explain cost volume profit analysis, Cost volume profit analysis Meani...

Cost volume profit analysis Meaning and definition Cost volume profit analysis is a technique for studying the relationship between cost volume and profits . profits of an

What are the elements of cost, Elements of cost: 1. Material: the sub...

Elements of cost: 1. Material: the substance from which the product is made is known as material it may be in a raw or a manufactured state. It can be direct as well as indir

Evaluate a proposed investment, Q. Evaluate a proposed investment? BMP ...

Q. Evaluate a proposed investment? BMP Consulting (BMPC) conducted an analysis of Delta Corp. and found that the firm consists of two different divisions: Pet Lovers, a pet sup

Payback period, if equipment will be depreciated on a straight-line depreci...

if equipment will be depreciated on a straight-line depreciation basis over a five year period with an estimated residual value, what do I do with this information in a investment

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd