Liquidity Ratios

Activity Ratios

Profitability Ratios

Leverage Ratios

Liquidity ratios measure how capable a company is in meeting its current obligations $($bills$)$ as they come due.

Current ratio $=$ Current Assets $$ Current Liabilities

The Benchmark for Personal Finance $=1+$

Working capital ratio $=$ Current Assets $-$ Current Liabilities

The Benchmark for Personal Finance $=$ A positive value

In your original post, answer the following:

Choose a ratio from two of the four categories above: Liquidity, Activity, Profitability, or Leverage.

Using your Personal Income Statement and Balance sheet from last week's discussion, compute the two ratios.

Compare your result with the benchmark given in the table above. Does your ratio meet the benchmark? If not, what would you need to do to improve your ratio?