Liquidity

Current Ratio

Relates current assets to current liabilities and indicates the company's ability to meet its current (within one year) obligations. The company must be in a position to turn its assets into cash during the year in time to pay for the claims against it that fall due during the year.

____________Current Assets ______________

Current Liabilities (Creditors due within 1 year)

 

=	484.5	=	1.9 times
	250.2

(6) Quick Ratio

This ratio takes into account the fact that stock is frequently difficult to turn into cash in a hurry, especially if it is a stock of raw materials, or worse, part-completed work-in-progress. Even finished goods can be difficult to sell for a reasonable price in a forced sale situation. Stock is therefore excluded from the current assets value to leave only those assets that can be more readily turned into cash to set against the claims that will fall due during the year.

___________Current Assets - Stock_________

Current Liabilities (Credit due within 1 year)

.

=	484.5 - 129.1	=	1.4 times
	250.2