interpartation - Liquidity Measurement Ratios Liquidity...

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Liquidity Measurement Ratios Liquidity ratios attempt to measure a company's ability to pay off its short-term debt obligations Current ratio The ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. While this shows the company is not in good financial health, it does not necessarily mean that it will go bankrupt - as there are many ways to access financing - but it is definitely not a good sign. As we talk about attock refinery limited its current ratio is in better position in 2010 as compare to 2009.as ratio calculation showing that current ratio is 0.87 in 2009 but with a increase it is 0.91 which is showing good trend. Quick ratio The quick ratio is more conservative than the current ratio, a more well-known liquidity measure, because it excludes inventory from current assets. Inventory is excluded because some companies have difficulty turning their inventory into cash. In the event that short-term obligations need to be paid off immediately,
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interpartation - Liquidity Measurement Ratios Liquidity...

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