Liquidity Ratio Graphic

Liquidity Ratio

Helps You Identify If

Liquidity Ratio Video

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Liquidity Ratio In Jazoodle

A business Liquidity Ratio is a means of understanding a company’s susceptibility to either current of future financial distress. It also helps build a risk profile of the business. But remember though that a single “safe” liquidity measure does not exist across all industries. Some industries traditionally and successfully trade at low liquidity levels, whereas for others, the same figure is a sign of distress.

How do you get your Liquidity Ratio? The Liquidity Ratio gives a relative measure of current liabilities compared to current assets. Strive for a figure greater than 1.5. This means that your accessible assets can easily offset your immediate liabilities.

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