PrimeBooks

Accounting Analysis
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Ever wondered if there was another way to review the performance of your business additional to just using the Profit and Loss and Balance Sheet?

How about comparing your businesses performance against others in your industry?

The following formulas can be used to benchmark the performance of your business and assist you in identifying issues that require attention.

Liquidity Analysis Ratios

Current Ratio - This ratio assess the ability of the organisation to meet its short term commitments.

Current Ratio = Current Assets / Current Liabilities

Quick Ratio - This ratio is also known as the acid test and assess the organisations ability to convert its short-term assets to cover its short term liabilities.

Quick Ratio = (Current Assets - Inventories) / Current Liabilities