Liquidity

100

What is Liquidity?

The ability of a business to pay its short-term debts

100

How to manage cash flow problems?

Manage working capital effectively

Reliable cash flow forecasting

200

Acid Test Ratio

(Current Assets - Stock) / Current Liabilities

200

Current Ratio

Current Assets / Current Liabilities

300

Working Capital Formula

Current Assets - Current Liabilities

300

What are current assets?

Resources that are able to be converted into cash quickly

400

How can you improve working capital?

Debtors , Creditors , Stocks

400

What is an income statement?

Measures the performance of a business across the year .

Compares income against cost of goods / services / expenses

500

What is Overtrading?

When a business expands too quickly , putting pressure on short term finance

500

What is Debt Factoring?

The selling of debtors (money owed to the business) to a third party

500

What number would demonstrate effecient management of working capital?

1.5 - 2.0