A better mousetrap: using cash conversion to measure a company's liquidity

06/17/2013 | Journal of Accountancy

An accurate assessment of a company's liquidity can be vital for lending, auditing and investment purposes, as well as understanding vulnerabilities in risk assessment. This article discusses methods used to measure liquidity: the static measures, which offer more of a snapshot of liquidity, and the cash conversion cycle, which the authors say complements the static method by incorporating the element of time in the analysis.

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