• Working Capital
Monitoring the working capital helps you to measure your company’s available operating liquidity, which you can use to fund day to day operations. Working capital is calculated by subtracting current assets from current liabilities. Accounting firms in Dubai can help you monitor all the significant financial metrics.
• Current Ratio
Keeping track of the current ratio enables you to know whether your company can pay its short-term obligations that is obligations due within one year with its current assets and liabilities. The current ratio is a liquidity ratio that reflects a business ability to generate enough cash to pay off all its debts once they become due.
Current ratio = Current Assets / Current Liabilities.
• Quick Ratio
The quick ratio or acid test ratio is another key liquidity ratio used to measure a company’s ability to handle short-term obligations. The quick ratio is calculated using highly liquid current assets such as cash, marketable securities and accounts receivables. The rationale behind this is that current assets such as the inventory are not that easy to turn into cash. The formula to compute the quick ratio is,
Quick Ratio = (Current Assets – Inventory) / Current Liabilities.
