Catalog

	Table of Contents
p. 179 of 203 BACK | NEXT Foreword 1. Introduction to the Guidelines 2. User Instructions 3. Preparing and Appraising Investment Project 4. Financial Management of Executing Agencies 5. Reporting and Auditing 6. Financial Institutions 7. Knowledge Management 7.1. Useful Websites 7.2. Operations Manual (OM) 7.3. Project Administration Instructions (PAIs) 7.4. International Standards 7.5. International Accounting and Auditing Architecture 7.6. Financial Review Checklist for RRPs 7.7. Appraisal Checklist: Nonrevenue-Earning Project 7.8. Appraisal Checklist: Revenue-Earning Project 7.9. Appraisal Checklist: Private Sector Project 7.10. Appraisal Checklist: Financial Institution 7.11. Undertaking Sensitivity and Risk Analyses 7.12. Model Operating Covenants 7.13. Model Capital Structure Covenants 7.14. Model Liquidity Covenants 7.15. Commonly Used Ratios 7.15.1. Operating Indicators 7.15.2. Capital Adequacy Indicators 7.15.3. Liquidity Indicators 7.16. Model Financial Statements: Service Organization 7.17. Model Financial Statements: Manufacturing Organization 7.18. Model Terms of Reference for an Auditor 7.19. Audit Report Questionnaire Addendum

Financial Management and Analysis of Projects : 7. Knowledge Management : 7.15. Commonly Used Ratios

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7.15.3. Liquidity Indicators

7.15.3.1. The indicators in the table below are suitable for assessing liquidity

Ratios or Other Measures	Computation Method	Significance and Notes
24. Current Ratio	Current Assets Current Liabilities	Measures the short-run debt paying ability. Is highly dependant on the quality and content of Current Assets. See section 3.6.4.2 for a legal description and section 4.4.8.2 for a discussion of applicability.
25. Quick Ratio (Acid Test)	Cash + Marketable Securities + Accounts Receivable+ Other Liquid Assets (excluding inventories) Current Liabilities	Measures short-term liquidity but does not depend on the realizing of inventories. See section 3.6.4.3 for a legal description and section 4.4.8.2 for a discussion of applicability.
26. Days in Receivables	Average Accounts Receivable x 360 days Revenues	Measures the average number of days required to recover accounts receivable.
27. Accounts Receivable Turnover	Net Revenues Average Accounts Receivable	Measures the number of times that receivables turn over in a year. The higher the turnover, the shorter the time between sales and collecting cash.
28. Days in Inventory	Average Inventory Cost of Goods Sold / 360	Measures the average number of days it will take to sell an inventory.
29. Inventory Turnover	Cost of Goods Sold Average Inventory	Number of times the inventory is turned over in a period.
30. Days in Accounts Payable	Average Accounts Payable Cost of Goods Sold / 360 days	Measures the average time span of unpaid payables.
31. Accounts Payable Turnover	Cost of Goods Sold Average Accounts Payable	Measures the number of times Accounts Payable turnover during a period.

Back 7.15.2. Capital Adequacy Indicators	Next 7.16. Model Financial Statements: Service Organization