1. Introduction to Accounting Preparing for a User’s Perspective
Liquidity Ratios: Quick Ratio, Working Capital, Cash Conversion Cycle
Debits and Credits Trainer
By Kevin C. Kimball, CPA
with support from
Free Jan. 2014
Available on the Google Play Store

2. Liquidity Ratios: Quick Ratio
(Current assets – inventories)/ Current liabilities
Quick assets, or acid-test ratio
Stricter
More Conservative

3. What is the quick ratio? By Investopedia.com
20X1: 32,000/23,000 = 1.39
20X2: 41,000/17,000 = 2.41

4. LAC
20X1: 49,000/23,000 = 2.13
versus
20X2: 48,000/17,000 = 2.82
OR versus
Source: bizstats.com
YouTube Video: Obtain key financial ratios using bizstats.com website

5. What is the quick ratio? By Investopedia.com
20X1: 32,000/23,000 = 1.39
20X2: 41,000/17,000 = 2.41

6. Liquidity Ratios: Working Capital
(Current assets – Current liabilities)

7. 20X1: 49, ,000 = 26,000
20X2: 48, ,000 = 31,000

8. + - Liquidity Ratios: Cash conversion cycle
Buy->Sit->Sell + -
Wait to pay $
Wait to collect $
Days of inventory outstanding
Days sales outstanding
Days payable outstanding
Days of inventory outstanding + Days sales outstanding
- Days payables outstanding
4) Cash Conversion Cycle

9. Liquidity Ratios 1) Current Ratio Current assets / Current liabilities
2) Quick Ratio
(Current assets – inventories)/ Current liabilities
3) Working Capital
(Current assets – Current liabilities)
Days of inventory outstanding + Days sales outstanding
- Days payables outstanding
4) Cash Conversion Cycle
Liquidity: Ability to pay off current liabilities as the come due within the next year.

10. Introduction to Accounting Preparing for a User’s Perspective
Liquidity Ratios: Quick Ratio, Working Capital, Cash Conversion Cycle
Debits and Credits Trainer
By Kevin C. Kimball, CPA
with support from
Free Jan. 2014
Available on the Google Play Store