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FINANCIAL MANAGEMENT ASSIGNMENT GUIDE 2022
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The guide has formulas and how ratios are treated.
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Compiled by Tello Email:muzavazi47@gmail.com Mobile:0717513144DISCLAIMER
The assignment guide is for Financial Management. It is a product of internal and
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0717513144 Page 1
, Compiled by Tello Email:muzavazi47@gmail.com Mobile:0717513144
Financial Management Assignment Guide
1. Current ratio
CR = Current Assets/ Current liabilities
A CA is an asset that is easily converted to cash or expected to be
converted to cash within a fiscal year or operating cycle.
Examples of current assets
Inventory
Accounts receivables
Cash
Taxes receivables
Supplies
A CL consists of short-term financial obligations that are typically due
within one year. Current liabilities could also be based on a company's
operating cycle, which is the time it takes to buy inventory and convert
it to cash from sales.
Examples of current liabilities
Accounts payables
Accrued expenses (interest payments, property taxes, employee
wages)
Taxes payables
Unearned revenue
Dividends payables
Payroll liabilities
Short term debt
Comment: The current ratio is a measure of liquidity that compares all of a
company’s current assets to its current liabilities. If the ratio of current assets
over current liabilities is greater than 1.0, it indicates that the company has
enough available to cover its short-term debts and obligations.
2. Acid test ratio
ATR = (Cash + Short term investments + current receivables –
inventory –prepaid expenses) / current liabilities
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