Liquidity
What is Liquidity?
The ability of a business to pay its short-term debts
How to manage cash flow problems?
Manage working capital effectively
Reliable cash flow forecasting
Acid Test Ratio
(Current Assets - Stock) / Current Liabilities
Current Ratio
Current Assets / Current Liabilities
Working Capital Formula
Current Assets - Current Liabilities
What are current assets?
Resources that are able to be converted into cash quickly
How can you improve working capital?
Debtors , Creditors , Stocks
What is an income statement?
Measures the performance of a business across the year .
Compares income against cost of goods / services / expenses
What is Overtrading?
What is Debt Factoring?
The selling of debtors (money owed to the business) to a third party
What number would demonstrate effecient management of working capital?
1.5 - 2.0