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Liquidity and leverage ratios
Track month by month whether the business can meet short-term bills and carry its debt.
Finance & unit economicsHow it's worked out
- Current = current assets ÷ current liabilities. Quick = (current assets − inventory) ÷ current liabilities. Net debt ÷ EBITDA = (borrowings − cash) ÷ EBITDA. Interest cover = EBITDA ÷ interest
- Balance sheet values at the same date; EBITDA and interest over the same trailing 12 months
NoteBelow 1 on the current ratio means short-term liabilities exceed short-term assets. Lenders often set covenants on net debt to EBITDA and interest cover, so compare with your own loan terms rather than a general rule.
Source: Standard financial statement analysis (CFA Institute curriculum)
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