RatioFormula for CalculationRatio
Current Ratiocurrent assets / current liabilities220.127.116.11.3 Quick Ratio(current assets - Inventory) / Current Liabilities0.991.031.030.76 Inventory TurnoverCOGS / average inventory6.356.796.436.52 Days of Inventory on Hand365 / Inventory Turnover57.4853.7656.7755.98
A liquidity ratio determines how much cash or available funds the company can use within a financial period. It shows the company’s ability to meet its short-term financial obligations. Current Ratio is the most popular financial ratio used to test company liquidity by providing the number of times current assets can cover current liabilities. Here it shows that for every dollar in current liabilities, on average Target has roughly $1.60 in current assets. Quick Ratio is similar to the current ratio, as it measures the amount of the most liquid current assets there are to cover current liabilities. A general rule of thumb states that the ratio should be 1 to 1. Here Target has been able to closely maintain a 1 to 1...