Chapter 9. Liquidity
Short-term liquidity measures • Current ratio • Quick ratio • Working capital to sales ratio • Working capital days
Money is the most important thing in the world. It represents health, strength, honour, generosity and beauty as conspicuously and undeniably as the want of it represents illness, weakness, disgrace, meanness and ugliness. | ||
| --GEORGE BERNARD SHAW (1856–1950) | ||
Short-term liquidity measures
The first test of a company’s financial position is, ‘Will it have sufficient cash over the immediate future to meet its short-term liabilities as they fall due?’ Unless the answer here is positive, the company is in a financial crisis ...
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