“In the midst of movement and chaos, keep stillness inside you.” Deepak Chopra Cash Ratio The cash ratio the most conservative ratio than the current and quick ratios. To calculate it, we take the sum of cash & equivalents and marketable securities, and divide it by total current assets. As you have probably guessed, this ratio indicates a company’s ability … Read More
Financial Ratios Series – Liquidity Ratios Part 3
“Go to bed a little wiser than when you woke up.” Charlie Munger Quick/Acid Test Ratio The quick ratio, or also known as the acid test ratio, is very similar to the current ratio. The main difference is that it is a more conservative ratio. It means that instead of looking at all the current assets of a company, we … Read More
Financial Ratios Series – Liquidity Ratios Part 2
“Change your thoughts and you change your world.” Norman Vincent Peale Current Ratio The first ratio we’ll look at is the Current Ratio. This ratio measures the amount of current assets in a company that is available to pay for its current liabilities. If you recall from part 1, current assets are the type that can be converted into cash … Read More
Financial Ratios Series – Liquidity Ratios Part 1
“The world is changed by your example, not your opinion.” Paulo Coelho Liquidity ratios are extremely important in the CMA exam. You will be heavily tested in this area. When I took the exam, I didn’t get any ratio questions in the multiple-choice question section, but one of my essay questions asked me to calculate over 20 ratios for each … Read More
Establishing Goals & Objectives
“If you want a virtue, act as if you already have it and then it will be yours”, Aristotle Why plan? The ultimate goal of public and private companies is to increase shareholder wealth. To this end, companies must remain competitive and continuously attempt to out-perform their competitors and increase market share. In order to do so, companies must develop … Read More
