FINANCIAL RATIOS AND BUSINESS DECISIONS

Financial Ratios and Business Decisions

Financial Managers Decision Making

The short-term solvency would be the company's ability to pay debts falling due within a year or so. Their rates do not only respond to the uncertainty of short-term creditors, but also give an idea of the consistency of "working capital" that holds the company. For measurement are typically used three types of indexes, each with their own meaning and applicable to different situations according to the information you want to have. These three indices or ratios are:

General Credit or Working Capital Ratio

This is obtained by dividing total current assets ...