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

Short term cash forecasts, The significant objectives of short-term cash fo...

The significant objectives of short-term cash forecast are as given: find out operating cash requirement anticipating short term financing Organization investment of

What is direct material cost variance, What is Direct material cost varianc...

What is Direct material cost variance It can be defined as the difference between the standard costs of direct material specified and the actual cost of direct material used.

Coca Cola Balance Sheet, Required: 1. Using the information provided prepa...

Required: 1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current li

Cindy, School problem is asking to calculate the work in progress inventory...

School problem is asking to calculate the work in progress inventory for the beginning of a month without providing previous month data.

Describe the limitations of management accounting, Describe the Limitations...

Describe the Limitations of management accounting: 1. Based on accounting information: the correctness and effectiveness of managerial decisions will depend upon the quality

State the capital turnover ratio, Capital turnover ratio  Meaning: th...

Capital turnover ratio  Meaning: this ratio establishes a relationship among net sales and capital employed. Objective: the objective of computing this ratio is to verif

What is production cost, What is Production cost It begins with the sup...

What is Production cost It begins with the supplying of materials, labour and services and ends with the primary packing of the product. Therefore, it includes the cost of d

Uncertainty of demand-determining the safety stocks level, UNCERTAINTY OF D...

UNCERTAINTY OF DEMAND Demand is the most troublesome variable to predict accurately. Actually, demand may fluctuate from day to day, from week to week or from month to month. T

Financial management, discuss the applicability of an operating cycle in ve...

discuss the applicability of an operating cycle in vegetable growing in a low developed country like Uganda- Africa

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