The results indicated increase in profitability and gearing ratios and decrease in PE, equity and quick ratios
. The study by Punda (15), on UK companies found that, though UK GAAP and IFRS are very much similar in many aspects, still there was sizeable difference in financial ratios after conversion to IFRS, with respect to profitability and liquidity ratios.
Different ratios are often used to measure liquidity such as quick and adjusted quick ratios
. Striving to evaluate the worst case scenario VaR or LaVaR may be applied.
It is also important to remember that one can expect a relationship to hold between the current and quick ratios
and the cash conversion cycle, but it may either be positive as Richards and Laughlin (1980) argue, or negative, as Lyroudi and McCarty (1993) have reported.
So pull out your game playbook (budget), print out your year-to-date profit and loss statement, balance sheet, financials for the same time period in 2012, and a copy of s your key performance ratios like gross margin, inventory turns, current and quick ratios
, accounts receivable aging, ROI, to name a few.
In a similar manner, current and quick ratios
declined marginally but stayed quite high.
Nevertheless, in accounting and auditing textbooks, the current and quick ratios
continue to be the focus of liquidity analysis.
Students will identify the driver of the differences in the current and quick ratios
, and will explore issues in managing working capital.
Several traditional financial ratios (the current ratio and quick ratios
, days' sales in inventory, debt and debt-equity ratios, return on assets, and Altman Z-score) were then calculated based on the equations summarized below.
These theories predict that firms with higher leverage, shorter debt maturity, lower interest coverage, and less liquidity (e.g., lower quick ratios
) are more likely to use derivatives to hedge financial risk.
In other words, 1987-1991 quick ratios
were averaged to predict the 1994 CII, while 1991-1995 quick ratios
were averaged to predict the 1998 CII.
Top 10 home furnishings retailers' quick ratios
for the most recent quarter
In this analysis, we use the current and quick ratios
. The current ratio is current assets divided by current liabilities.