Oi Biggles!

[thewizeard]

/me yawns but remains riveted ... I love teh numbers..

[Skweeky]

Ok...

What should liquidity and solvency be at for a company to be deemed succesful?

I vaguely remember one of them is calculated in relation to 1...


Blast... I used to be brilliant at this stuff

Just shows you how much you forget by not using it

[Biggles]

Ok...

What should liquidity and solvency be at for a company to be deemed succesful?

I vaguely remember one of them is calculated in relation to 1...


Blast... I used to be brilliant at this stuff

Just shows you how much you forget by not using it

The liquidity ratio is generally shown as say 2:1 - that is there are twice the assets to liabilities. Once you get below 1:1 you are in trouble. But I recall a ratio of 3:1 as being a nice comfort zone. Too high and one would question the fiscal astuteness of the Finance Director - that money could be more gainfully employed in higher return activities.

I don't use these much either and this is a bit of trip down exam memory lane for me.