Access over 35 million academic & study documents

Module 26 Liquidity

Content type
User Generated
Subject
Economics
School
Grand Canyon University
Type
Homework
Rating
Showing Page:
1/5
Module 26
Student’s First Name, Middle Initial(s), Last Name
Institutional Affiliation
Course Number and Name
Instructor’s Name and Title
Assignment Due Date

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/5
Question 1
Liquidity refers to the readiness of the amount of money which can be easily spent or
invested. This implies the how easy a security can be readily changed into ready cash with no
change in the market price. Examples of liquidity may include; stocks, bonds, cash, notes and
treasury bills. It can also include an asset that can be easily sold off. The liquidity of a firm can
be measured using three main ratio metrics i.e. quick, cash and current ratios. Current ratio refers
to the ability of a firm to use its asset sales in paying off short term debts. It can be derived
through evaluating the current assets of a firm divided by the current liabilities. Quick ratio refers
to a type of current ratio that excludes current assets not as liquid as cash, accounts receivable or
short-term investments. An example is inventory exclusion. Cash ratio refers to the ability of a
firm in using its cash for paying off its debts. It can be derived by dividing the cash by the
current liabilities. The ratio excludes accounts receivables and inventories while defining the
ability of a firm to keep solvent during an emergency.

Sign up to view the full document!

lock_open Sign Up
Showing Page:
3/5

Sign up to view the full document!

lock_open Sign Up
End of Preview - Want to read all 5 pages?
Access Now
Unformatted Attachment Preview
Module 26 Student’s First Name, Middle Initial(s), Last Name Institutional Affiliation Course Number and Name Instructor’s Name and Title Assignment Due Date Question 1 Liquidity refers to the readiness of the amount of money which can be easily spent or invested. This implies the how easy a security can be readily changed into ready cash with no change in the market price. Examples of liquidity may include; stocks, bonds, cash, notes and treasury bills. It can also include an asset that can be easily sold off. The liquidity of a firm can be measured using three main ratio metrics i.e. quick, cash and current ratios. Current ratio refers to the ability of a firm to use its asset sales in paying off short term debts. It can be derived through evaluating the current assets of a firm divided by the current liabilities. Quick ratio refers to a type of current ratio that excludes current assets not as liquid as cash, accounts receivable or short-term investments. An example is inventory exclusion. Cash ratio refers to the ability of a firm in using its cash for paying off its debts. It can be derived by dividing the cash by the current liabilities. The ratio excludes accounts receivables and inventories while defining the ability of a firm to keep solvent during an emergency. Question 2 Cash Budget July Aug ust Septe mber Octo ber Nove mber Dece mber Janu ary Febr uary Marc h April May June 1,78 0,00 0 1,92 0,00 0 2,06 0,00 0 2,20 0,00 0 2,34 0,00 0 100, ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Anonymous
Excellent resource! Really helped me get the gist of things.

Studypool
4.7
Indeed
4.5
Sitejabber
4.4