In: Finance
Balance in checking account = 5,000 | Market value of house = 155,000 | Shares held = 8,000
Credit card debt = 5,000
For Liquidity index, we only consider those assets which can be converted to cash easily. This is same as Quick ratio for a company.
Liquidity index = (Cash + Marketable securities) / Short-term Debt
Liquidity index = (5000 + 8000) / 5000
Liquidity index = 13,000 / 5,000
Liquidity index = 2.6
Hence, Maria's Liquidity index is 2.6