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For liquidity ratios there are no signs of difference, also some profitability ratios with various of expense ratios. Users needs to determine an appropriate industry average ratio when used for comparisons with their own data. [12] Another potential problem for industry averages is the accuracy of the data used by individuals and organizations.
In contrast, if a business has fast payment from customers, but long terms from suppliers, it may have a low quick ratio and yet be very healthy. Generally, the acid test ratio should be 1:1 or higher for a healthy company. However, this varies widely by industry. [2] In general, the higher the ratio, the greater the company's accounting ...
For a corporation with a published balance sheet there are various ratios used to calculate a measure of liquidity. [1] These include the following: [2] The current ratio is the simplest measure and calculated by dividing the total current assets by the total current liabilities. A value of over 100% is normal in a non-banking corporation.
Quick ratio (also known as an acid test) or current ratio, accounting ratios used to determine the liquidity of a business entity; In accounting, the liquidity ratio expresses a company's ability to repay short-term creditors out of its total cash. It is the result of dividing the total cash by short-term borrowings.
Download QR code; Print/export ... Average accounting return; Average propensity to consume; ... Quick ratio; R. Rachev ratio; Rate of return;
The current ratio is an indication of a firm's accounting liquidity. Acceptable current ratios vary across industries. [1] Generally, high current ratio are regarded as better than low current ratios, as an indication of whether a company can pay a creditor back. However, if a company's current ratio is too high, it may indicate that the ...
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Tobin's q [a] (or the q ratio, and Kaldor's v), is the ratio between a physical asset's market value and its replacement value. It was first introduced by Nicholas Kaldor in 1966 in his paper: Marginal Productivity and the Macro-Economic Theories of Distribution: Comment on Samuelson and Modigliani .