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प्रश्न
Discuss the importance of the liquid ratio.
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उत्तर
It explains the relationship between liquid assets and current liabilities. It indicates whether a firm has sufficient funds to pay its current liabilities immediately. It is calculated as:
`"Liquid ratio" = "Liquid assets"/"cuurent liablities"`
Liquid assets = current assets − stock − prepaid expenses
Importance of Liquid Ratio:
It helps determine whether a firm has sufficient funds to pay all its current liabilities immediately.
It does not include stock, since it takes comparatively more time to convert the stock into cash. Further, prepaid expenses are also not included in liquid assets, since these cannot be converted into cash. The ideal Liquidity Ratio is considered to be 1 : 1. It means that the firm has a rupee in the form of liquid assets for every rupee of current liabilities.
