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Liquidity ratios are measures company's ability to meet current obligations. Following are the
typeas of liquidity ratios
(i) Current ratio: Current ratio measures the extent to which current assets meets current
liabilities.
Formula = Current Assets/current liabilities
(ii) Quick Ratio : Quick ratioindicates the extent to which quick assets satisfies current liabilities
Formula = Cash and cash equivalents/Current liabilities
Solution
Liquidity ratios are measures company's ability to meet current obligations. Following are the
typeas of liquidity ratios
(i) Current ratio: Current ratio measures the extent to which current assets meets current
liabilities.
Formula = Current Assets/current liabilities
(ii) Quick Ratio : Quick ratioindicates the extent to which quick assets satisfies current liabilities
Formula = Cash and cash equivalents/Current liabilities

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Liquidity ratios are measures companys ability to meet current obl.pdf

  • 1. Liquidity ratios are measures company's ability to meet current obligations. Following are the typeas of liquidity ratios (i) Current ratio: Current ratio measures the extent to which current assets meets current liabilities. Formula = Current Assets/current liabilities (ii) Quick Ratio : Quick ratioindicates the extent to which quick assets satisfies current liabilities Formula = Cash and cash equivalents/Current liabilities Solution Liquidity ratios are measures company's ability to meet current obligations. Following are the typeas of liquidity ratios (i) Current ratio: Current ratio measures the extent to which current assets meets current liabilities. Formula = Current Assets/current liabilities (ii) Quick Ratio : Quick ratioindicates the extent to which quick assets satisfies current liabilities Formula = Cash and cash equivalents/Current liabilities