3 Liquidity Ratios You Should Know

Liquidity Ratios help you assess if a business can meet its short-term obligations. In this video, I'll introduce you to three well-known Liquidity Ratios:

▪ Current Ratio: Also known as the Working Capital Ratio. This is the least conservative Liquidity Ratio. It's calculated by dividing Current Assets by Current Liabilities.
▪ Quick Ratio: Also known as the Acid-Test Ratio, it only considers Liquid Assets.
▪ Cash Ratio: This is the most conservative Liquidity Ratio. We can calculate the Cash Ratio by dividing Cash and Cash Equivalents by Current Liabilities.

⏱️TIMESTAMPS
00:00 - Intro
00:34 - 1. Current Ratio
03:05 - 2. Quick Ratio
04:18 - 3. Cash Ratio

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[AccountingStuff]

I've rereleased this after fixing a typo which was kindly pointed out to me by @i2iwithhorses

⏱TIMESTAMPS
00:00 - Intro
00:34 - 1. Current Ratio
03:05 - 2. Quick Ratio
04:18 - 3. Cash Ratio

[CSI-Accounting-and-Payroll]

Awesome video on liquidity ratios! Super important stuff for managing cash flow. Love how you've explained it so clearly.

[parmoksha]

Thank you so much. Finally i completed entire playlist of 57 videos

[biblecomics]

Hi James, awesome video. Please also add the recommended level of liquid ratios and why? That would give a critical thinking for reasonableness.

[giansera]

Thanks for this! Becker's ratio videos are a nightmare.

[merosaber]

I like it. Please, make more videos for this series.

[on]

Can I ask if having a high earnings per share ratio, does it indicates that the company is expanding?

[nurfarhanabtabdulhadi]

i love you so much these contents are golden ❤😣

[Nepenthe]

Hey James, another great video! I've found that understanding the link between liabilities and equity with assets through the perspective of 'funding' really opened things up for a beginner like me! Thank you!

Quick query - What would an example for a 'cash equivalent' be? Would short-term investments (like treasury bills) be considered as one?

PS: It would be amazing if you could throw up a quick balance sheet analysis of a banking entity in the near future!

[bretcanny]

You should do a video on amortization! ALL of your videos are awesome 😊

[vyomrane]

Amazing as always! Seeing as folks are making requests, have you covered MACRS depreciation on the channel? I find that one to be quite befuddling when I compare it to other more manageable depreciations.

[sunniknowledge]

It's good to see you 😊
My request is please make a video on provision entry. Absolutely there are many different types of provision.

[kaustubhvirkar]

Hey James! Thanks for this greatly informative video! Could you please make some more videos on corporate finance/financial management? I have just started learning about accounting and finance and your videos have been a beacon for me! I'm sure a lot of us would benefit if you made videos on corporate financing, investment and dividend decisions!

[phamvannam]

Can you do a video about accounting for receivables, especially valuation and disposition of accounts receivable ?

[halalaffirmations]

Hello James, please do a video tutorial on how to report TikTok Shop earnings on Quickbooks! Thank you.

[velicialing]

Hello . May I ask question about current ratio . Prepaid expense is something we pay in advance, used to pay service bill, how it works to pay the liabilities, I'm curious about it . If you don't mind could you tell me . Thanks before😊

[suhanajuneja]

Please make a video on activity ratios too❤

[mroscarking]

Hi James, what do you mean when you say most/least conservative?

[noor-rrr]

Do you provide any discount code for financial poor students ? Im interested in financial ratio cheat sheet

[SNBEATS-zd]

Hey James, Can you do a video about MANUFACTURING ACCOUNTS, by the way, this video was great, THANKS