1. Analysis and Interpretation of British Accounts Short-term Liquidity Measures

2. Liquidity §The amount of time required to convert an asset into cash or pay liability. 1 „Encyclopaedia of Banking & Finance“; Munn/Garcia/Woelfel; Bankers Publishing Company; 9th Edition; Illinois 1991

3. Level of Liquidity Fixed Assets Stocks Debtors Investments Cash at Bank and in Hand Level of Liquidity Asset

4. Current Ratio Long Investments Stocks Cash Owner’s Fund Long-term Liabilities Current Liabilities Balance Sheet +

5. Quick Ratio Long Investments Stocks Cash Owner’s Fund Long-term Liabilities Current Liabilities Balance Sheet

6. Working Capital to Sales Ratio Long investments Current Assets Owner’s Fund Long-term Liabilities Current Liabilities Balance Sheet Sales £1.250.000 PBIT £ 850.000 Interest £ 136.000 PBT £ 714.000 Tax £ 264.180 PAT £ 449.820 Ordinary £ 180.820 RE £ 269.000 Profit & Loss Account

7. Working Capital Days Goods are received on day 0 Goods are sold on day 44 Payment is received on day 85 Goods are received on day 0 Goods are received on day 0 inventory 44 days accounts receivable 41 days accounts payable 26 days Time gap cash-out/cash-in The funding requirement on the company is 59 days

8. Working Capital Required An increase in Sales produces the need for additional working capital!