O'Reilly logo

The Complete Idiot's Guide® To Accounting by Lita Epstein, Shellie L. Moore

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Checking Your Cash Status

Let’s start with the liquidity ratios. These ratios allow you to test whether your company can meet its financial obligations. If you can’t pay your bills, your business won’t be alive for long. There are two commonly used liquidity ratios: Current Ratio and Quick (Acid Test) Ratio.
235
DEFINITION
Current Ratio compares current assets to current liabilities to give a quick glimpse at your business’s ability to pay bills. Quick (Acid Test) Ratio is similar to the Current Ratio, but does not include Inventory. Inventories are the least liquid of the current assets and some believe they should not be included when assessing ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required