Liquidity ratios:
vCurrent
& Quick
vCurrent
ratio = cur. assets / cur. Liabilities
vEX: C.
Assets = $6 mill; C. Liab.
= $2 mill
vCurrent Ratio =
6/2 = 3
vThis means
that there are 3 times as many assets as liabilities (the
bankers will be happy)
vCurrent ratios
< 2 may indicate trouble