Liquidity Measurements

THIS CHAPTER IS FILLED with measurements that are of considerable use to lenders, investors, and investment analysts. The measures are used to evaluate a company's viability. This is accomplished by examining a company's ability to collect accounts receivable in an efficient manner, use its inventory within a short time, pay its accounts payable when due, and maintain a sufficient amount of liquid funds to pay off short-term liabilities.

The titles of the measurements in this chapter are:

Accounts Receivable Turnover Average Receivable Collection Period Days Delinquent Sales Outstanding Days Sales in Receivables Index Accounts Receivable Investment Ending Receivable Balance Inventory to Sales Ratio Inventory Turnover Inventory to Working Capital Ratio Liquidity Index Accounts Payable Days Accounts Payable Turnover Current Ratio Quick Ratio Cash Ratio Sales to Current Assets Ratio Working Capital Productivity Days of Working Capital Weighted Working Capital Defensive Interval Ratio Current Liability Ratio Required Current Liabilities to Total Current Liabilities Ratio Working Capital to Debt Ratio Risky Asset Conversion Ratio Noncurrent Assets to Noncurrent Liabilities Ratio Short-Term Debt to Long-Term Debt Ratio Altman's Z-Score Bankruptcy Prediction Formula


Description: The speed with which a company can obtain payment from customers for outstanding receivable balances is crucial for the reduction of cash ...

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