Determine the absolute liquid ratio - liquidity ratios, Managerial Accounting

Assignment Help:

Absolute liquid ratio - Liquidity ratios

Although receivables debtors and bills receivable are usually more liquid than inventories yet there may be doubts regarding their realization into cash right away or in time. Hence some authorities are of the opinion that the absolute liquid ratio should also be calculated together with current ratio and acid test ratio so as to exclude even receivable from the current assets and find out the absolute liquid assets.

Absolute liquid assets contain cash in hand and at bank and marketable securities or tem pray investment. The acceptable norm for this ratio is 50% or 0.5:1 or1:2 i.e. re.1 worth absolute liquid assets are considered adequate to pay rs 2 worth current liabilities in time as all the creditor s are not expected to demand cash at the same time and then cash may also be realized from debtors and inventories.

 


Related Discussions:- Determine the absolute liquid ratio - liquidity ratios

What are the classification and computation of variances, Classification an...

Classification and computation of variances The computation and analysis of variances is the main aim of standard costing. The variance is the difference among the standard pe

Advantages-disadvantages-standard costing, The advantages and disadvantages...

The advantages and disadvantages of standard costing The benefits for controlling having a standard costing system in operation can be summed up as follows; Cautiously pl

Explain about cost centre, Explain about Cost centre: Meaning & defini...

Explain about Cost centre: Meaning & definition: cost centre is defined as a location, person or item of equipment (or group of them) in respect which costs may be ascertaine

Sales of cool-man air conditioners, Sales of Cool-Man air conditioners have...

Sales of Cool-Man air conditioners have increase steadily during the past five years: Year    Sales 1        450 2        495 3        518 4        563 5        584 6          ?

draw a timeline for the assembly department, #queComputing equivalents uni...

#queComputing equivalents units and assigning costs to completed units and ending work in process; no beginning inventory or cost transferred in (30 -45min) Sue Electronics makes

Operating cycle concepts, Operating cycle considers to the average time lap...

Operating cycle considers to the average time lapse among the acquisition of raw material and the final cash realization. This notion is used to determine the needs of cash working

Explain activity based costing versus traditional costing, Activity based c...

Activity based costing versus traditional costing Following are the main differences between activity based costing system and traditional costing system: Explain  1) Und

Financial management, using the operating cycle and any financial managemen...

using the operating cycle and any financial management knowledge discuss the applicability of such cycle to poultry business in Uganda (consider broilers)

Explain management accounting, Explain Management accounting Meaning &...

Explain Management accounting Meaning & definition: Management accounting is comprises of two words, Management and accounting. It is the study of managerial aspect of the ac

How much must you deposit each year to reach your goal, Right now you are 2...

Right now you are 20 years old and you have decided that you want to have $2,000,000 in the bank when you turn 65 years old. How much must you deposit each year to reach your goal

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd