FINANCE Module Formulas for BUAD5006
Liquidity Ratiosfrom BALANCE SHEET: Current Assets, Current Liabilities, Inventory and Cash figures needed.
Current Ratio= Current Assets / Current Liabilities =
(broadest) ability to meet obligations
Quick Ratio= (Current Assets–Inventory) / Current Liabilities =
(Acid–Test) Pay short-term w/o inventory sales
Cash Ratio= Cash / Current Liabilities =
(pure liquidity) Pay short-term w/ cash and marketable securities
Major Asset Management Ratios units of measure
Inventory Turnover = Sales / Inventory = times
(i.e. 2.84) Goal–HIGH
(i.e 129)
Accounts payable turnover = COGS / Accounts payable= times
