Understanding The Ratios
For different industries and differing legal systems the use of differing ratios and results would be appropriate. For instance, in a country with a legal system that gives a slow or uncertain result a higher level of liquidity would be appropriate to cover the uncertainty related to the valuation of assets. A manufacturer with stable cash flows may find a lower quick ratio more appropriate than an Internet-based start up corporation.
Read more about this topic: Accounting Liquidity
Famous quotes containing the word ratios:
“Typography is not only a technology but is in itself a natural resource or staple, like cotton or timber or radio; and, like any staple, it shapes not only private sense ratios but also patterns of communal interdependence.”
—Marshall McLuhan (1911–1980)