How well can current assets cover current liabilities? Reviewed by Amy Drury The acid-test ratio (ATR), also commonly known as the quick ratio, measures the liquidity of a company by calculating how ...

These are examples of assets not normally easily disposed of. Key Takeaway: Formally, if an asset isn't expected to be cashable within a year, it isn’t considered a current asset. In business, a ...

The quick ratio, also known as the acid-test ratio, measures a company's ability to pay off its current debt. Current debt includes any liabilities coming due within a year, like accounts payable and ...

Claire Boyte-White is the lead writer for NapkinFinance.com, co-author of I Am Net Worthy, and an Investopedia contributor. Claire's expertise lies in corporate finance & accounting, mutual funds, ...

Liquidity ratios assess if a company can cover short-term debts with available assets. Key ratios include cash, quick, current, and operating cash flow ratios. A liquidity ratio over 1 suggests a ...

There’s no universal safe or danger level. Ideal current ratios vary by industry. A current ratio of 1.0 means the company has $1 in current assets for every $1 in current liabilities. A ratio below 1 ...

When you’re evaluating a potential investment, you likely look at profitability and growth, but there is one fundamental concept you must master first: liquidity. Just as a household needs enough cash ...

Liquidity ratios are important financial metrics that can determine whether a company can pay off its short-term debts without having to raise more capital. One of these ratios is the current ratio, ...