11/19/2023 0 Comments Ppe turnover ratio formula![]() ![]() If the value of a current ratio is considered high, then the company may not be efficiently using its current assets, specifically cash, or its short-term financing options. In other words, the ratio measures the speed at which a company pays its suppliers. The accounts payable turnover ratio shows investors how many times per period a company pays its accounts payable. Along with other financial ratios, the current ratio is used to try to evaluate the overall financial condition of a corporation or other organization. The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. In these cases, the analyst can use specific ratios, such as the fixed-asset turnover ratio or the working capital ratio to calculate the efficiency of these asset classes. ![]() Sometimes, investors and analysts are more interested in measuring how quickly a company turns its fixed assets or current assets into sales. If current liabilities exceed current assets (the current ratio is below 1), then the company may have problems meeting its short-term obligations (current liabilities). ![]() If a company’s current ratio is in this range, then it generally indicates good short-term financial strength. A company can be endowed with assets and profitability but short on liquidity if its assets cannot be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. Bookkeeping by Adam Hill Login to ReadyRatiosĪlong with fixed assets, such as property, plant, and equipment, working capital is considered a part of operating capital. ![]()
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