CH 5 Solvency Ratios

Card Set Information

Author:
Giovanni
ID:
156998
Filename:
CH 5 Solvency Ratios
Updated:
2012-06-03 04:52:01
Tags:
Solvency
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Description:
Ratios used to determine the solvency of a company
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  1. Current Ratio
    Current Assests / Current Liabilities
  2. Quick Ratio
    Cash + Market Securities + A/R / Current liabilities

    • Similar to the current ratio, this ratio
    • provides a more stringent test of a company’s solvency.
  3. Interest coverage
    • Net income + tax expenses + interest expence /
    • Interest expense
  4. Accounts Payable Turnover
    Cost of goods sold / Average accounts payable

    • This ratio measures the extent to which
    • accounts payable is used as a form of financing.

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