Finance Formulas / July 18, 2018 / Cecelia Weiss
Knowing the Cross Price Elasticity of Demand of its own and other related products allows a firm to map out the market. The firm can then calculate how many competitors it has, and how closely related they are. It also allows a firm to measure how important its complementary products are to its own products.
The current ratio is mainly used to give an idea of a company's ability to pay back its liabilities (debt and accounts payable) with its assets (cash, marketable securities, inventory, accounts receivable). As such, current ratio can be used to make a rough estimate of a company’s financial health. The current ratio can give a sense of the efficiency of a company's operating cycle or its ability to turn its product into cash.
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