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liquidity
Essay specific features
Written by:
Ernest A
Date added:
October 10, 2012
Level:
University
Grade:
A
No of pages / words:
2 / 550
Was viewed:
1451 times
Rating of current essay:
Essay content:
The higher the ratio, the more liquid the business is considered to be. Some people seem to suggest there is an ‘ideal’ current ratio (usually 2:1) for all businesses however this fails to take into account the fact that different types of businesses require different current ratios. For example, a manufacturing business will often have a high current ratio because it is necessary to hold raw materials and will normally sell goods on credit, thereby incurring debtors...
displayed 300 characters
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For example, a manufacturing business will often have a high current ratio because it is necessary to hold raw materials and will normally sell goods on credit, thereby incurring debtors. A supermarket chain, on the other hand, will have a low current ratio, as it will only hold fast-moving stock and will generate mostly cash sales revenue...
displayed 300 characters
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