Liquidity Ratios

In the above example, Company has an unsatisfactory current ratio of 0.73 in the year 2013 which is improving in the years 2014 and 2015 owing to a decrease in current liabilities.

Similarly, the quick ratio of 0.35 in the year 2013 is also highly insufficient due to the high proportion of stock in trade in current assets. The ratio is improving in years 2014 and 2015 due to an increase in other current assets mainly cash and bank balances; however, it needs to be improved further.

What is a Liquidity Ratios?

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