Want to learn Fundamental Investing?

I am committing to teaching basic fundamental investing, which will include a balance sheet, cash flow statement, income statement and all ratios revolving around them.

I will add one ratio every day to this thread🧵🧵:

1) Quick Ratio:

As the name suggests, this ratio is used to analyse how quickly can a company generate cash during turbulence or need.

It represents assets of a company that can be converted to cash in less than 90 days against its liabilities.

A ratio of 2 denotes it has twice as much cash to pay off any short-term liabilities, while a ratio of less than 1 denotes it might struggle in the short-term in case there's a cash crunch or business failure.

2) Working Captial Ratio:

It's also called the current ratio, which is a liquidity ratio that measures a firm’s ability to pay off its current
liabilities with current assets. It's important to creditors because it shows the liquidity of the
company.

Here's how it's calculated: