'Cash Ratio'

The cash ratio is the ratio of a company's total cash and cash equivalents to its current
liabilities. The metric calculates a company's ability to repay its short-term debt; this
information is useful to creditors when deciding how much debt, if any, they would be
willing to extend to the asking party. The cash ratio is generally a more conservative look
at a company's ability to cover its liabilities than many other liquidity ratios because other
assets, including accounts receivable, are left out of the equation.

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Current Ratio
The current ratio is a liquidity ratio that measures a company's ability to pay short-
term and long-term obligations. To gauge this ability, the current ratio considers the
current total assets of a company (both liquid and illiquid) relative to that companys
current total liabilities.

The formula for calculating a companys current ratio, then, is:

Current Ratio = Current Assets / Current Liabilities

The current ratio is called current because, unlike some other liquidity ratios, it
incorporates all current assets and liabilities.

The current ratio is also known as the working capital ratio.

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The quick ratio is an indicator of a companys short-term liquidity. The quick

ratio measures a companys ability to meet its short-term obligations with its most liquid
assets. For this reason, the ratio excludes inventories from current assets, and is
calculated as follows:

Quick ratio = (current assets inventories) / current liabilities, or

= (cash and equivalents + marketable securities + accounts receivable) / current

liabilities
The quick ratio measures the dollar amount of liquid assets available for each dollar of
current liabilities. Thus, a quick ratio of 1.5 means that a company has $1.50 of liquid
assets available to cover each $1 of current liabilities. The higher the quick ratio, the
better the company's liquidity position. Also known as the acid-test ratio" or "quick
assets ratio."

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The quick ratio is an indicator of a companys short-term liquidity. The quick

ratio measures a companys ability to meet its short-term obligations with its most liquid
assets. For this reason, the ratio excludes inventories from current assets, and is
calculated as follows:

Quick ratio = (current assets inventories) / current liabilities, or

= (cash and equivalents + marketable securities + accounts receivable) / current

liabilities

The quick ratio measures the dollar amount of liquid assets available for each dollar of
current liabilities. Thus, a quick ratio of 1.5 means that a company has $1.50 of liquid
assets available to cover each $1 of current liabilities. The higher the quick ratio, the
better the company's liquidity position. Also known as the acid-test ratio" or "quick
assets ratio."

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Inventory Turnover

Inventory turnover is a ratio showing how many times a company's inventory is sold and
replaced over a period. The days in the period can then be divided by the inventory
turnover formula to calculate the days it takes to sell the inventory on hand or "inventory
turnover days."

Generally it is calculated as:

Inventory Turnover = Sales / Inventory

However, it may also be calculated as:

Inventory Turnover = Cost of Goods Sold / Average Inventory

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What is 'Gross Profit Margin'

Gross profit margin is a financial metric used to assess a firm's financial
health by revealing the proportion of money left over from revenues after
accounting for the cost of goods sold. Gross profit margin serves as the
source for paying additional expenses and future savings.

Calculated as:

Where:COGS = Cost of Goods Sold

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