Answer / m.s.s.v.sri kumar

Liquidity mean ability to clear the current liabilities.
The arthematical expression between the current liabilities
and current assets is called liquidity ratio.
the ideal ration is 2:1

Answer / sahil mangla

Liquidity ratio / Acid Test ratio / Quick Ratio is a short
term solvency ratio which shows the ability of a business
concern to meet its current liabilities or liquid
liabilities to be more precise.
It is calculated as :-
Liquid Assets
Liquid Ratio = --------------------
Liquid Liabilities

Where,
Liquid Assets = Current Assets - Stock - Prepaid expenses
+ Liquid Value of Stock

Liquid Assets means those assets which are convertible into
cash without any reduction in value, e.g.marketable
securities.
Liquid value of stock is the value at which the stock can
be realised at a short notice and is taken instead of its
cost because the stock price is not constant, and pp
expenses are not included as they cannot be used to pay off
any liability.

Liquid Liabilities = Current Liabilities - Bank O.D.
- Cash Credits - S.T.Loans

These are subtracted because bank O.D and Cash Credit
Facility are not withdrawn by banks all of a sudden and
liquid liability should only include those liabilities
which may be due instantaneousy at a very short notice.

ALTERNATIVELY,

Liquid Ratio may be computed as :-

Liquid Assets
--------------------
Current Liabilities

BUT, the first approach is much more advisable as it
provides the true picture of the liquidity position.

Answer / m.s.s.v.sri kumar

It express the relation between the liquid assets and liquid
liabilities.
Except Inventory all current assets are called as Liquid
assets and Except Bank OD all current liabilities are called
as liquid liabilities. The Ideal ratio is 1:1
Liquid ratio = Liquid assets/ liquid liabilities

Answer / dvsm.f.m

liquidity ratio is aiso known as quick ratio and acid test
ratio it is compute quick assets divided by current
liabilities

Answer / sanu

Liquidity mean ability to clear the current liabilities.
The arthematical relationship between the current assets
to current liabilities is called liquidity ratio.
the ideal ration is 2:1

it is also defined as the ability to convert assets into
cash quickly and without any price discounts

Answer / nagarjuna

liquidity ratio is a ratio of quick assets to curent
liabilities it is also known as quick ratio or acid test
ratio it shows ability of firm to meet its immdiate
financial commitiments.

Answer / sunil kumar

Liquidity ratio is known as Quick Ratio

Current assets- stock/ W.I.P
______________________________
Current liabilities

Answer / p t rao

A class of financial metrics that is used to determine a
company's ability to pay off its short-terms debts
obligations. Generally, the higher the value of the ratio,
the larger the margin of safety that the company possesses
to cover short-term debts. The other term is also current
ratio.

Answer / utkal

liquidity ratio is the ratio at which the firms are able to
clear their current liability

Answer / vandana

Total dollar value of cash and marketable securities
divided by current liabilities. For a bank this is the cash
held by the bank as a proportion of deposits in the bank.
The liquidity ratio measures the extent to which a
corporation or other entity can quickly liquidate assets
and cover short-term liabilities, and therefore is of
interest to short-term creditors. also called cash asset
ratio or cash ratio.

what is the Casualty Actuarial Society?

0 Answers  

I have qualified in the Axis Bank aptitude.Now my interview is on Nov.So pls tell me what questions are asked in the interview and tell me the reference book for interview in Axis Bank.

0 Answers   Axis Bank,

What is meant by OTC?

10 Answers  

Why do you understand by money market? Give an example.

0 Answers   SEBI,

What Is The Difference Between Accounts Payable And Accrued Expenses Payable?

0 Answers  

What is Pradhan Mantri Jan Dhan Yojana?

0 Answers   State Bank Of India SBI,

Sean Alicandri, a sophisticated investor who is both willing and able to take risk, has just noticed that Mid- West Airlines has become the target of a hostile takeover. Prior to the announcement of the offer to purchase the stock for $72 a share, the stock had been selling for $59. Immediately after the offer, the offer the stock rose to $75, a premium over the offer price. Such premiums are often indicative that investors expect a higher price could occur if a bidding was erupts for the company or if management buyout of the firm. Of course, if neither of these scenarios occurs, the price of the stock could fall back to the $72 offer price. In addition, if the offer were to be withdrawn or defeated by management, the price of the stock could fall below the original stock price. Alicandri has no reason to anticipate that any of these possibilities will be the final outcome, but the realizes that the price of the stock will not remain at $75. If a bidding war erupts, the price could easily exceed$100. Conversely, if the takeover fails, he expects the price to decline below $55 a share, since he previously believed that the price of the stock was overvalued at $59. With such uncertainty, Alicandri does not want to own the stock but is intrigued with the possibility of earning a profit from a price movement that he is certain must occur. Currently there are several three months put and all options traded on the stock. Their strike and market prices are as follows: Strike Price Market Price of Call Market Price of Put $50 $26.00 $0.125 55 21.50 0.50 60 17.00 1.00 65 13.25 1.75 70 8.00 3.50 75 4.25 6.00 80 1.00 9.75 Alicandri decides the best strategy is to purchase both a put and a call option (to establish a straddle). Deciding on a strategy is one thing; determining the best way to execute it is quite another. For example, he could buy the options with the extreme strike price (i.e. the call at $80 and the put at $50). Or he could buy the options with the strike price closest to the original $72 offer price (i.e. buy the put and the call at $70). To help determine the potential profits and losses from various positions, Alicandri developed profit profiles at various stock prices by filling in the following chart for each position: Price of the stock Intrinsic Value of the Call Profit on the Call Intrinsic Value of the Put Profit on the Put Net Profit $50 55 60 65 70 75 80 85 To limit the number of calculations, he decided to make three comparisons: (1) the purchase of two inexpensive options-buy the call with the $80 strike price and the put with the $60 strike price, (2) the purchase of the options with the $70 strike price, and (3) the purchase of the options with the price closest to the original stock price (i.e., the options with the $60 strike price). Construct Alicandri’s profit profiles and answer the following questions. 1) Which strategy works best if a bidding war erupts? 2) Which strategy works best if the hostile takeover is defeated? 3) Which strategy works best if the original offer price becomes the final price? 4) Which of the three positions produces the worst result and under what condition does it occur? 5) If you were Alipcandri’s financial advisor, which strategy would you advise he establish? Or would you argue that he not speculate on this takeover?

0 Answers   Investment Bank,

what is weighted average rating factor?

0 Answers  

What is SEZ?

1 Answers  

what is the maximum number of directors in public limited company

12 Answers  

What are the pros and cons of cashless economy?

0 Answers   RBI,

what is CMA ?

7 Answers