Can the company fund operations and near-term obligations?
| Concept | Explanation | |---|---| | Current ratio | Current assets divided by current liabilities. | | Quick ratio | Liquid current assets divided by current liabilities. | | Receivables | Amounts owed by customers. | | Inventory | Goods held for production or sale. | | Payables | Amounts owed to suppliers. | | Cash runway | Time a loss-making company can operate before needing more funding. |
A high current ratio is not automatically strong if assets are slow-moving inventory or uncollectible receivables.