Finance Formulas / August 5, 2018 / Aniyah Booth
The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations. To gauge this ability, the current ratio considers the current total assets of a company (both liquid and illiquid) relative to that company’s current total liabilities.
Cross Price Elasticity of Demand (XED) is the responsiveness of demand for one good to the change in the price of another good. It is the ratio of the percentage change in quantity demanded of good x to the change in the price of Good Y. In business, Cross Elasticity of Demand is important because it will help determine whether or not it is a good move to increase or decrease prices or to substitute one product for another for revenue.
If a corporation has issued only one type, or class, of stock it will be common stock. ("Preferred stock" is discussed later.) While "common" sounds rather ordinary, it is the common stockholders who elect the board of directors, vote on whether to have a merger with another company, and get huge returns on their investment if the corporation becomes successful.
Current assets are generally listed first on a company's balance sheet and will be presented in the order of liquidity. That means they will appear in the following order: cash (which includes currency, checking accounts, petty cash), temporary investments, accounts receivable, inventory, supplies, and prepaid expenses.
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