Current Ratio, Debt Ratio, What is the concept of Quick Ratio?

Current ratio: The ability of a company to immediately liquidate and repay its current liabilities.

Gearing ratio: The lower the gearing ratio, the better the financial health of the business.

Quick ratio: indicates the degree of capital margin of the enterprise, and the low ratio indicates that the capital chain of the enterprise is tight, generally 1-2 is reasonable.

Current Ratio The flow of the company's funds, products.

Debt Ratio: Own funds vs. borrowings.

Quick Ratio The speed at which money flows.

The current ratio is the ratio of current assets to current liabilities, i.e., current ratio = current assets and current liabilities.

The quick ratio is the ratio of liquid assets to liquid liabilities, i.e., quick ratio = liquid assets and current liabilities.

The asset-liability ratio is the percentage of total liabilities to total assets, that is, asset-liability ratio = total liabilities Total assets * 100%.

Asset-liability ratio = (total liabilities Total assets) * 100%, and a better asset-liability ratio indicator is 60%.

Current ratio = (current assets and current liabilities) * 100% The internationally recognized standard ratio is 200%.

Quick Ratio = (Liquid Assets, Current Liabilities) * 100%, the internationally recognized standard ratio is 100%.

2. Current ratio = current assets and current liabilities.

3. Quick ratio = (current assets - inventory) Current liabilities.

4. Conservative quick ratio (cash, short-term** + notes receivable, net accounts receivable) current liabilities.

5. Business cycle = inventory turnover days + accounts receivable turnover days.

6. Inventory turnover rate (times) = cost of sales Average inventory, wherein: average inventory = (inventory at the beginning of the year + inventory at the end of the year) 2

Inventory turnover days = 360 Inventory turnover ratio = (average inventory * 360) Cost of sales.

7. Accounts receivable turnover rate (balance spine) = sales revenue average accounts receivable.

Among them: sales revenue is the net amount after deducting discounts and discounts; Accounts receivable is the amount of bad debt provision not deducted.

Accounts receivable turnover days = 360 Accounts receivable turnover ratio = (average accounts receivable * 360) Net income from main business.

8. Current asset turnover rate (times) = sales revenue Average current assets.

9. Total asset turnover rate = sales revenue and average total assets.

10. Asset-liability ratio = total liabilities Total assets When calculating in ordinary months, sales revenue does not need to be converted into a full year. It can be an annual turnover, a monthly turnover. Turnover ratio for the current period (this period).

The current debt ratio refers to the ratio of current liabilities to total liabilities. The current debt ratio can reflect the extent to which a company is dependent on short-term creditors. The higher the ratio, the more dependent the company is on short-term funds.

There is no absolute standard for the current debt ratio to be more or less normal, and there are inevitable objective reasons for the current debt ratio of an enterprise that is operating normally and continuously in different periods. Personally, I judge that the current debt ratio is in the range of 30%-70%, which is relatively normal.

Data Extensions. When the ratio is high or high: (1) the cost of capital of the enterprise decreases; (2) increased risk of debt repayment; (3) It may be the result of the decrease in the company's ability to make profits, or it may be the result of the increase in the company's business volume.

When the ratio decreases or is low: (1) the solvency of the enterprise is reduced; (2) the stability of the enterprise structure is improved; (3) It may be that the business of the enterprise is shrinking, or it may be that the profitability of the enterprise is improving.

There are several possibilities for the increase in current liabilities: First, the increase in accounts payable and advance receipts indicates that the enterprise Qiao Peifeng occupies other people's funds without interest, which is beneficial to the enterprise. The second is the increase in the salary payable to employees, which shows that enterprises are in arrears of wages, and it is necessary to pay attention to the leniency and not get it to court.

Current Liability Ratio = Total Current Liabilities Total Assets. The current debt ratio refers to the ratio of the current liabilities to the total assets. The higher the ratio, the stronger the company's dependence on short-term funding.

Current debt ratios typically include: working capital, current ratio, quick ratio, cash ratio, and cash flow ratio.

** Article 130 of the Act.

The supervision and management agency shall stipulate the risk control indicators such as the net capital, the ratio of net capital to liabilities, the ratio of net capital to net assets, the ratio of net capital to the scale of self-management, underwriting, asset management and other businesses, the ratio of liabilities to net assets, and the ratio of current assets to current liabilities. **The company shall not provide financing or guarantee to its shareholders or their affiliates.

The quick ratio is the ratio of liquid assets to current liabilities

Quick Ratio = (Current Assets - Inventories - Amortized Expenses - Prepayments) Total Liabilities of Liquid Balance.

Current Ratio = Total Current Assets Total Current Liabilities.

Current assets: cash and deposits, short-term investments, receivables and advances, amortized expenses, inventories.

Current liabilities: short-term borrowings, notes payable, accounts payable, advance receipts, wages payable, taxes payable.

Benefits payable, profits payable, other payables, withholding expenses.

The quick ratio, also known as the "acid test ratio", refers to the ratio of liquid assets to current liabilities. It is a measure of the ability of a company's current assets to be immediately realized to repay current liabilities. The quick ratio can directly reflect the short-term solvency of the enterprise, it is a supplement to the current ratio, and it is more intuitive and credible than the current ratio.

If the current ratio is high, but the liquidity of current assets is low, the short-term solvency of the enterprise is still not high. In the distressed bridge assets, the valuable assets can generally be converted into cash, accounts receivable, notes receivable, prepaid accounts and other items in the market immediately, which can be realized in a short period of time, while inventory, amortized expenses and other items take a long time to realize.

In particular, inventories are likely to be overstocked, unsalable, defective, and cold-backed, and their liquidity is poor, so companies with high current ratios do not necessarily have a strong ability to repay short-term debts, and the quick ratio avoids this situation. The quick ratio should generally be kept above 100.