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Liquidity Ratios |
Also found in: Dictionary/thesaurus, Wikipedia, Hutchinson | 0.03 sec. |
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Liquidity ratios Ratios that measure a firm's ability to meet its short-term financial obligations on time, such as the ratio of current assets to current liabilities. Liquidity Ratios What Does Liquidity Ratios Mean? A class of financial metrics used to help determine a company's ability to pay off its short-term debt obligations. Generally, the higher the value of the ratio is, the larger the margin of safety that the company possesses to cover short-term debts. Investopedia explains Liquidity Ratios Common liquidity ratios include the current ratio, the quick ratio, and the operating cash flow ratio. Different analysts consider different assets to be relevant in calculating liquidity. Some analysts calculate only the sum of cash and equivalents divided by current liabilities because they feel that they are the most liquid assets and therefore are the most likely to be used to cover short-term debts in an emergency. A company's ability to turn short-term assets into cash is of the utmost importance when creditors are seeking payment. Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to determine whether a company will be able to continue as a going concern. Related Terms: How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| Fitch views these strategic investments favorably and, although leverage and liquidity ratios may be pressured in the mid-term, believes these strategic investments should position ORHS to maintain its good market position in a fast growing and competitive service area. Although these sovereigns each face challenging constraints to achieving this coveted designation, Fitch concludes that a more rapid fiscal consolidation than anticipated, further improvements in external solvency and liquidity ratios, progress on structural reforms that address fiscal weaknesses or improve investment climates, and/or greater integration with the global economy could offset these constraints. Liquidity ratios exceed Fitch's medians for the rating category with 366. |
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