Cash Flow From Operations

The goal of every company’s normal operations is to generate a profit and generate positive cash flow from one accounting period to the next. Cash flow from operations answers the question of whether regular business operations generates cash from one accounting period to the next. Understanding cash flow from operations is essential with maintaining solvency.

Liquidity Ratios

Liquidity Ratios

Liquidity ratios are a group of ratios used to measure the ability of a business operation to meets its current obligations.   Liquidity ratios are similar to the initial medical tests a patient receives at a doctor’s visit.   Doctors take blood pressure, temperature, and pulse rate.   The doctor wants assurance that the primary indicators of health are good.  Liquidity ratios are exactly the same.  The user wants to know that the basic measurements of a business indicate good health today.

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