Formula
to calculate liquidity index ratio:
Liquidity
Index = ((Accounts receivable x collection period) +
(inventory x cycle period)) / (cash + accounts
receivable + inventory).
Liquidity
index ratio definition and explanation:
The
liquidity index indicates the number of days during
which assets are removed from cash.
The liquidity index, collection
period and cycle
period are included in the financial
statement ratio analysis spreadsheets highlighted in the
left column, which provide formulas, definitions,
calculation, charts and explanations of each ratio.
The liquidity index is listed in our liquidity
ratios.
The liquidity index ratio and other ratios are key
to understanding financial statements. Our
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Spreadsheets to
calculate ratios (includes formulas, definitions,
explanations and charts):
See list
of ratios , or the financial statement ratio
analysis spreadsheets which are not highlighted in the
left column, to see which other ratios our spreadsheets
calculate, define and explain.
The liquidity index ratio
may be included in our
custom 1, 3 or 5 period financial
statement ratio analysis spreadsheet.
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