Liquidity and debt-equity ratios are widely used financial ratios. Liquidity ratio, also called the 'short-term solvency' ratio shows the adequacy or otherwise of working capital for a company's day-to-day operations. It is calculated as current assets/current liabilities. An ideal current ratio would be 2, indicating that even if the current assets are to be reduced by half, the creditors will be able to able to get their money in full. But a lot depends on the composition of current assets. If a substantial portion of the current assets is made of slow-moving/obsolete stocks or if the debtors comprise ageing debts, the company may not be able to pay the creditors even if the current ratio is higher than 2.
Quick ratio means
The ideal current ratio for banks 1.33 : 1
stays the same
Two common ratios used to measure how a firm manages its financial assets are the current ratio and the quick ratio. The current ratio assesses a company's ability to cover its short-term liabilities with its short-term assets, while the quick ratio provides a more stringent measure by excluding inventory from current assets. Both ratios help investors and analysts evaluate liquidity and financial stability.
A quick ratio of 1 is regarded as ideal and demonstrates good liquidity within the business
Quick ratio means
The ideal current ratio for banks 1.33 : 1
Current ratio before payment = 800000 / 600000 = 1.33 Curren ratio after payment = 600000 / 400000 = 1.5
this ratio analyzes whether a company can pay off its short-term obligations using its current assets. generally, the ideal current ratio for a company is considered to be 2.00. current ratio is calculated using the following formula:Current ratio = Current assets / Current liabilities
stays the same
The current ratio of an ideal transformer is inversely related to the turns ratio because of the principle of conservation of power. In an ideal transformer, the input power (primary side) must equal the output power (secondary side), leading to the relationship ( V_p I_p = V_s I_s ), where ( V ) represents voltage and ( I ) represents current. Since the voltage ratio is equal to the turns ratio (( \frac{V_p}{V_s} = \frac{N_p}{N_s} )), the current ratio is inversely proportional: ( \frac{I_s}{I_p} = \frac{N_p}{N_s} ). Thus, as the turns ratio increases, the current on the secondary side decreases, and vice versa.
no impact
There is no single ideal ratio.
Ratio analysis is a tool used by management and fundamental investors to determine a company's general position in an industry or sector as it compares to their peers. An example would be the current ratio, which equals the current assets of a company divided by the current liabilities of which the firm is obligated. The current ratio gives investors and management a quick look as to how liquid a firm is. A large proportion of current assets to liabilities indicates a firm will have little trouble meeting its short term obligations regardless of the economic cycle. The analysis may extend to industry peers to compare companies on an apples to apples basis.
not provided, as the information given does not include the total debt amount.
The ideal agar to gelatin ratio for creating a stable gel in a dessert recipe is typically 1:1. This combination helps achieve a firm and stable texture in the final product.
Current Ratio is an indicator of a firm's ability to meet short-term financial obligations, it is the ratio of current assets to current liabilities. Though every industry has its range of acceptable current-ratios, a ratio of 2:1 is considered desirable in most sectors. Since inventory is included in current assets, acid test ratio is a more suitable measure where saleability of inventory is questionable. Formula: Current assets divided by Current liabilities.Refer to link below