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Strategies & Market Trends : Rande Is . . . HOME

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To: American Spirit who wrote (50937)	4/21/2001 3:44:18 PM
From: Joe Lyddon	Read Replies (1) of 57584

Current Ratio: Current Assets divided by Current Liabilities. Banks normally like a ratio of at least 2:1 (2.0) A Current Ratio of 16 is SUPER good! (which LPTH has) They could easily afford to use 14 times their current liabilities for other things before coming close to getting really bad financially. Now, this is all relative. . . if they have current assets of 1 mil, their current liabilities are 1/16th of it . . a mil isn't much.. But if their current assets were 1 bil, it's better of course. If a company has 10 bil in cash but owes 5 bil, current ratio is 2.0 and really does NOT have much cash to spend on anything else. Current Assets: assets like Cash in Bank, Accounts. receivable. . . Can be turned into Cash quickly. Current Liabilities: Accounts Payable, accrued payroll taxes. . . Must be paid very soon. Joe

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