These solutions may offer step-by-step problem-solving explanations or good writing examples that include modern styles of formatting and construction of bibliographies out of text citations and references. Students may use these solutions for personal skill-building and practice. Unethical use is strictly forbidden.Liquidity ratios give a measure for the ability of the company of “satisfying the short-term obligations” . Therefore, the ratios are relevant for a moment in time and not for average situations. The most common liquidity ratios are a) quick ratio, b) cash ratio, and c) defensive interval ratio.
Current ratio is calculated by dividing current assets by current liabilities (the latter is payable within one year). A greater ratio means a better position for the company in what regards the liquidity. Assets gather cash, account receivable, and inventories....
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