Skip to main content

Figure 13 shows a diagram formed by a square divided into two columns which are the same width and depth as each other. In the column on the left a narrow horizontal strip at the top is shaded pink and labelled Liquid assets. The rest of the column on the left is shaded purple and labelled Other assets. The column on the right is divided into three horizontal strips. The one at the top is shaded grey and labelled Short-term liabilities. The strip in the middle is the deepest, shaded mauve and labelled Other liabilities. The strip at the bottom is shaded green and labelled ‘Net worth. Underneath the diagram, there are three equations. The first reads Net worth = Assets – Liabilities. The second reads Current asset ratio = Liquid assets ÷ Short-term liabilities. The final equation reads Leverage ratio = Liabilities ÷ Assets × 10

 4.2 Balance sheet ratios