short term solvency, or liquidity, ratios

cash ratio

cash/current liabilities

networking capital to total assets

net working capital/total assets

quick ratio

current assets-inventory/current liabilities

interval measure

current assets/avg. daily operating costs

current ratio

current assets/current liabilities. a measure of short term liquidity. the higher the better.

short term solvency ratio

provide information about a firm's liquidity, sometimes called liquidity meausres. The primary concern is the firms ability to pay its bills over the short run without undue stress. these ratios focus on current assets and current liabilities.

current ratio = $708/540= 1.31 times

prufrock has $1.31 in current assets for every $1 in current liabilities, or, prufrock has its current liabilities covered 1.31 times over.