what are the definitions of these financial ratios? 1. Quick Ratio 2. Current Ratio 3. Average...

what are the definitions of these financial ratios?
1. Quick Ratio
2. Current Ratio
3. Average Inventory Ratio Average Accounts Receivable Ratio

Expert Solution

Quick Ratio

It shows the short term liquidity position of the firm. It can be computed with following equation :

Quick ratio equal or more than 1 is considered as good.

Current Ratio

It measures the company's ability to pay its short term obligation. It can be computed with following equation :

Quick ratio equal or more than 2 is considered as good.

Average Inventory Ratio

This ratio shows the number of times inventory replaced by company in a period.

Average Accounts Receivable Ratio

This ratio shows the company's effectiveness to control the credit sales and recovery of accounts receivable from clients.

jeff jeffy answered 2 hours ago

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