[Verse 1] When creditors come knocking at your door You need to know what cash you have in store Current assets versus current debt Will tell you if you're safe or in a threat Accounts receivable and inventory too Cash and short-term investments help you through Divide by liabilities due this year The current ratio makes it crystal clear [Chorus] Current over current, that's the way Two to one means you're okay Quick assets when you need them fast Acid test will make you last Liquid-ity, liquid-ity Shows your payment ability Current quick, don't be sick Financial health you can predict [Verse 2] But inventory might be hard to sell When cash is needed and time won't tell So take it out and find the quick Subtract inventory, that's the trick Cash plus receivables and short-term stocks Divided by the debt that really rocks Your boat when payments can't delay The acid test shows what you can pay [Chorus] Current over current, that's the way Two to one means you're okay Quick assets when you need them fast Acid test will make you last Liquid-ity, liquid-ity Shows your payment ability Current quick, don't be sick Financial health you can predict [Bridge] One point five for current's fine One point oh for quick's the line Below these marks you're in the red Above them keeps your business fed Working capital tells the tale Positive means you will not fail [Verse 3] Industry standards matter too What's good for one won't work for two Seasonal trends can shift the score Compare to peers and years before Bankers look at these ratios first To see if cash flow might get worse So calculate them every quarter Keep your liquidity in order [Chorus] Current over current, that's the way Two to one means you're okay Quick assets when you need them fast Acid test will make you last Liquid-ity, liquid-ity Shows your payment ability Current quick, don't be sick Financial health you can predict [Outro] When the bills are due tomorrow Don't let ratios bring you sorrow Keep them strong and keep them high Liquidity will never lie
← Solvency Ratios: Debt Management Analysis | Profitability Ratios: Measuring Financial Performance →