Resources that can be converted to cash in a relatively short period.

The financial resources in the form of coins and currency, bank deposits and short-term investments that can be converted easily into currency and that can be used to pay for resources and obligations of a business.

The ratio of operating income (sales revenue less operating expenses) to sales revenue.

The ratio of accounts receivable to average daily sales. Businesses that invoice for services might have an average collection period whereas a retail outlet probably would not.

Current assets divided by current liabilities. This is a measure of solvency of a business.

This ratio measure short-term solvency. It is the ratio of the most liquid of current assets (usually cash) to current liabilities.

The ratio of current assets to current liabilities. A company needs a positive working capital ratio to remain solvent.

Also known as profit margin. The ratio of net income to sales.

The amount of profit earned by a business that could be paid to the owners/shareholders. This is calculated by profit divided by average investment during the fiscal period.

Net income divided by stockholder’s equity. This evaluates the return earned based in comparison to investment. It is useful in evaluating the value of the investment to the stockholder.