1
Q
why are liquidity ratios so important
A
Liquidity ratios are used to determine whether the business has enough current assets to pay off any debts that may need repaying
2
Q
what does current ratio show
A
If the current assets are greater that the liabilities, then the
business is in a healthier shape than if it were the other way
around.
3
Q
what does liquid capital ratio tell us
A
It is important to measure a business’s liquidity without
the inclusion of inventory as inventory is the least liquid
as it takes time to sell.
BTEC BUSINESS UNIT 3
flashcards
Decks in class (23)
# Cards
-
Functions and role of money20
-
Methods of payment42
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Type of current accounts13
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Types of borrowing18
-
Types of Saving and Investment18
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Types of Insurance21
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Types of financial institutions28
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Methods of communicating with customers15
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Providers of financial information and guidance18
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Purpose of Accounting5
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Consumer protection in relation to personal finance4
-
Types Of Income14
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Types Of Expenditure7
-
Sources Of Finance56
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Cash Flow Forecasts23
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Break Even Analysis16
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Statement of comprehensive income15
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Statement of financial position7
-
Measuring profitability6
-
Measuring Liquidity3
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Measuruing Efficiency5
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Limitations Of Ratios0
-
Formulas25
