Investogist
No Result
View All Result
Friday, August 1, 2025
  • News
    • All
    • Africa
    • Nigeria
    • World
    FG approves 300% increase in electricity tariff

    NERC has no authority over state tariff – Enugu Electricity Regulator

    US Court clears Donald Trump to run for President

    Breaking: US and EU agree trade deal

    Federal Government commissions three “ultra-modern” oncology centers

    Federal Government commissions three “ultra-modern” oncology centers

    How to register for Nnamdi Azikiwe University’s 2025/2026 Post-UTME and Direct Entry Screening

    How to register for Nnamdi Azikiwe University’s 2025/2026 Post-UTME and Direct Entry Screening

    Nnamdi Azikiwe University issues notice to Postgraduate Graduands on 17th Convocation Ceremony

    Nnamdi Azikiwe University’s guidelines for 2025/2026 POST-UTME, Direct entry screening exercise

    FG lists 4 border points in Ukraine Nigerians can cross to safety

    FG denies JSS1 admission age rumors, confirms 10-year minimum

    FG approves 300% increase in electricity tariff

    Enugu State Electricity Regulator lacks power to reduce electricity tariff – NERC

    UK bans Nigerian students and others from bringing family

    UK stops issuing new Health and Care Worker visas to foreign workers

    Trump wins a resounding victory in first Republican primary in Iowa

    Trump secures U.S. – Japan strategic trade and investment agreement

    • Nigeria
    • Africa
    • World
  • Economy
    • All
    • Budgets
    • Economic Data
    • Policies
    “CBN plans to shut down financial transactions” – Apex Bank warns of fake news

    CBN’s Monetary Policy Committee retains interest rate at 27.50%

    President Tinubu approves establishment of South-East Investment Company

    President Tinubu approves establishment of South-East Investment Company

    UK tightens visa rules for care workers, skilled workers and students

    UK tightens visa rules for care workers, skilled workers and students

    United States scraps visa dropbox service for Nigerian applicants

    President Donald Trump cancels protection for 500,000 Haitian migrants

    Spain golden visa scheme ends as Portugal and Greece demand increases

    Spain golden visa scheme ends as Portugal and Greece demand increases

    CBN fines nine banks 150 million Naira each for failing to dispense cash

    CBN ends free ATM withdrawals for other banks’customers

    FG increases private university application fee from N5m to N25m

    FG increases private university application fee from N5m to N25m

    United States scraps visa dropbox service for Nigerian applicants

    United States scraps visa dropbox service for Nigerian applicants

    Buhari says Nigeria security and economy improved during his tenure

    Buhari says Nigeria security and economy improved during his tenure

    • Policies
    • Budgets
    • Economic Data
  • Business
    • All
    • Agriculture
    • Companies
    • Industry
    • Technology
    Shareholders of Linkage Assurance Plc approve share bonus distribution

    Shareholders of Linkage Assurance Plc approve share bonus distribution

    Aradel Holdings to list shares on NGX Main Board October 14

    Aradel Holdings Plc reports N368.1 billion revenue for H1 2025

    Custodian Investment Plc announces 25 kobo interim dividend

    Custodian Investment Plc announces 25 kobo interim dividend

    Seplat Energy increases share capital, lists new shares

    Seplat Energy increases share capital, lists new shares

    MTN Nigeria to pay over N200 billion final dividend for 2022

    List of Dividends announced in 2025, qualification and payment dates

    FY 2020: UAC of Nigeria Plc posts 27.8% decline in profit after tax from continuing operations

    UAC of Nigeria grows revenue by 32.6% to N110.4 billion in H1 2025

    UBA Plc profit for H1 2021 grew by 36.35% to N60.58 billion

    UBA commences Rights Issue of 3.15 billion ordinary shares

    Approval given for acquisition of International Energy Insurance Plc

    UAC of Nigeria Plc to acquire Chivita|Hollandia (CHI Limited)

    Agro-Industrial giant Presco Plc reports N10.12bn profit in H1 2021

    Presco Plc declares ₦20.00 interim dividend for H1 2025

    • Companies
    • Industry
    • Technology
  • Markets
    • All
    • Commodities
    • Cryptocurrencies
    • Forex
    • Rates & Bonds
    • Stocks/Equities
    Nigerian Exchange – Stock Market report for the week ended 7th July, 2023

    The Nigerian Exchange records impressive performance in H1 2025

    Cryptocurrency: XRP hits new All-Time High at US$3.65

    Cryptocurrency: XRP hits new All-Time High at US$3.65

    NGX suspends trading in the shares of four listed companies

    Banking stocks plunge after CBN suspends banks under regulatory forbearance from paying dividends

    ELECTION: Cutix Plc reschedules Board Meeting

    Weekly Report: Nigerian Exchange sees mixed performance as Cutix Plc emerge top gainer

    Again DMO offers N360 billion FGN bond for February

    DMO offers N300 billion FGN bond for auction in May

    NGX Daily Equities Market Report: Market gains for third consecutive days

    CSCS Plc explores listing on the Nigerian Exchange (NGX)

    NGX Daily Equities Market Report: Market gains for third consecutive days

    NGX delists Flour Mills shares, lists additional NB and Jaiz Bank shares

    Bitcoin soars above $21,000 as U.S. dollar sags

    BITCOIN hits $103,000 for the first time

    Bitcoin (BTC) rises above US$90,000 records a new all time high

    Bitcoin (BTC) rises above US$90,000 records a new all time high

    • Stocks/Equities
    • Forex
    • Rates & Bonds
    • Commodities
    • Cryptocurrencies
  • Travel & Tours
    • Arts & Entertainment
    • Nature
    • Places & People
  • Opinion & Analysis
    • All
    • Columnists
    • Editorials
    • Investogist Business Saturday
    • Op-ed
    How does family of 6 survive with income of N250,000 a month

    How does family of 6 survive with income of N250,000 a month

    Trump wins a resounding victory in first Republican primary in Iowa

    How Donald Trump won the 2024 U.S Presidential Election

    Rovina Medical Diagnostic Services offers free Breast and Prostrate cancer scans

    Rovina Medical Diagnostic Services offers free Breast and Prostrate cancer scans

    Security features of the new naira notes revealed by the CBN

    New hope for Naira fixed income savers?

    The Nigerian Stock Market: Has Tinubu’s Election impacted the Market Negatively?

    Nigerian Exchange gains 5.37% in Tinubu’s first week, highest for any President since return to Democracy

    The Nigerian Stock Market: Has Tinubu’s Election impacted the Market Negatively?

    The Nigerian Stock Market: Has Tinubu’s Election impacted the Market Negatively?

    Just in: Bandits attack President Buhari’s convoy in Katsina, two injured

    2015 vs 2023 Data: Nigeria situation went from bad to worse under Buhari

    Who is Hiba Abouk soon to be Achraf Hakimi’s ex-wife worth millions of dollars?

    Who is Hiba Abouk soon to be Achraf Hakimi’s ex-wife worth millions of dollars?

    LP won Obio-Akpor LGA Rivers State not APC as announced – INEC’s IReV

    APC won Abua-Odual and Ahoada East LGAs of Rivers State as announced – INEC’s IRev

    • Editorials
    • Book Club
    • Investogist Business Saturday
    • Op-ed
  • Sports
    • Football
  • Vacancies
Investogist
  • News
    • All
    • Africa
    • Nigeria
    • World
    FG approves 300% increase in electricity tariff

    NERC has no authority over state tariff – Enugu Electricity Regulator

    US Court clears Donald Trump to run for President

    Breaking: US and EU agree trade deal

    Federal Government commissions three “ultra-modern” oncology centers

    Federal Government commissions three “ultra-modern” oncology centers

    How to register for Nnamdi Azikiwe University’s 2025/2026 Post-UTME and Direct Entry Screening

    How to register for Nnamdi Azikiwe University’s 2025/2026 Post-UTME and Direct Entry Screening

    Nnamdi Azikiwe University issues notice to Postgraduate Graduands on 17th Convocation Ceremony

    Nnamdi Azikiwe University’s guidelines for 2025/2026 POST-UTME, Direct entry screening exercise

    FG lists 4 border points in Ukraine Nigerians can cross to safety

    FG denies JSS1 admission age rumors, confirms 10-year minimum

    FG approves 300% increase in electricity tariff

    Enugu State Electricity Regulator lacks power to reduce electricity tariff – NERC

    UK bans Nigerian students and others from bringing family

    UK stops issuing new Health and Care Worker visas to foreign workers

    Trump wins a resounding victory in first Republican primary in Iowa

    Trump secures U.S. – Japan strategic trade and investment agreement

    • Nigeria
    • Africa
    • World
  • Economy
    • All
    • Budgets
    • Economic Data
    • Policies
    “CBN plans to shut down financial transactions” – Apex Bank warns of fake news

    CBN’s Monetary Policy Committee retains interest rate at 27.50%

    President Tinubu approves establishment of South-East Investment Company

    President Tinubu approves establishment of South-East Investment Company

    UK tightens visa rules for care workers, skilled workers and students

    UK tightens visa rules for care workers, skilled workers and students

    United States scraps visa dropbox service for Nigerian applicants

    President Donald Trump cancels protection for 500,000 Haitian migrants

    Spain golden visa scheme ends as Portugal and Greece demand increases

    Spain golden visa scheme ends as Portugal and Greece demand increases

    CBN fines nine banks 150 million Naira each for failing to dispense cash

    CBN ends free ATM withdrawals for other banks’customers

    FG increases private university application fee from N5m to N25m

    FG increases private university application fee from N5m to N25m

    United States scraps visa dropbox service for Nigerian applicants

    United States scraps visa dropbox service for Nigerian applicants

    Buhari says Nigeria security and economy improved during his tenure

    Buhari says Nigeria security and economy improved during his tenure

    • Policies
    • Budgets
    • Economic Data
  • Business
    • All
    • Agriculture
    • Companies
    • Industry
    • Technology
    Shareholders of Linkage Assurance Plc approve share bonus distribution

    Shareholders of Linkage Assurance Plc approve share bonus distribution

    Aradel Holdings to list shares on NGX Main Board October 14

    Aradel Holdings Plc reports N368.1 billion revenue for H1 2025

    Custodian Investment Plc announces 25 kobo interim dividend

    Custodian Investment Plc announces 25 kobo interim dividend

    Seplat Energy increases share capital, lists new shares

    Seplat Energy increases share capital, lists new shares

    MTN Nigeria to pay over N200 billion final dividend for 2022

    List of Dividends announced in 2025, qualification and payment dates

    FY 2020: UAC of Nigeria Plc posts 27.8% decline in profit after tax from continuing operations

    UAC of Nigeria grows revenue by 32.6% to N110.4 billion in H1 2025

    UBA Plc profit for H1 2021 grew by 36.35% to N60.58 billion

    UBA commences Rights Issue of 3.15 billion ordinary shares

    Approval given for acquisition of International Energy Insurance Plc

    UAC of Nigeria Plc to acquire Chivita|Hollandia (CHI Limited)

    Agro-Industrial giant Presco Plc reports N10.12bn profit in H1 2021

    Presco Plc declares ₦20.00 interim dividend for H1 2025

    • Companies
    • Industry
    • Technology
  • Markets
    • All
    • Commodities
    • Cryptocurrencies
    • Forex
    • Rates & Bonds
    • Stocks/Equities
    Nigerian Exchange – Stock Market report for the week ended 7th July, 2023

    The Nigerian Exchange records impressive performance in H1 2025

    Cryptocurrency: XRP hits new All-Time High at US$3.65

    Cryptocurrency: XRP hits new All-Time High at US$3.65

    NGX suspends trading in the shares of four listed companies

    Banking stocks plunge after CBN suspends banks under regulatory forbearance from paying dividends

    ELECTION: Cutix Plc reschedules Board Meeting

    Weekly Report: Nigerian Exchange sees mixed performance as Cutix Plc emerge top gainer

    Again DMO offers N360 billion FGN bond for February

    DMO offers N300 billion FGN bond for auction in May

    NGX Daily Equities Market Report: Market gains for third consecutive days

    CSCS Plc explores listing on the Nigerian Exchange (NGX)

    NGX Daily Equities Market Report: Market gains for third consecutive days

    NGX delists Flour Mills shares, lists additional NB and Jaiz Bank shares

    Bitcoin soars above $21,000 as U.S. dollar sags

    BITCOIN hits $103,000 for the first time

    Bitcoin (BTC) rises above US$90,000 records a new all time high

    Bitcoin (BTC) rises above US$90,000 records a new all time high

    • Stocks/Equities
    • Forex
    • Rates & Bonds
    • Commodities
    • Cryptocurrencies
  • Travel & Tours
    • Arts & Entertainment
    • Nature
    • Places & People
  • Opinion & Analysis
    • All
    • Columnists
    • Editorials
    • Investogist Business Saturday
    • Op-ed
    How does family of 6 survive with income of N250,000 a month

    How does family of 6 survive with income of N250,000 a month

    Trump wins a resounding victory in first Republican primary in Iowa

    How Donald Trump won the 2024 U.S Presidential Election

    Rovina Medical Diagnostic Services offers free Breast and Prostrate cancer scans

    Rovina Medical Diagnostic Services offers free Breast and Prostrate cancer scans

    Security features of the new naira notes revealed by the CBN

    New hope for Naira fixed income savers?

    The Nigerian Stock Market: Has Tinubu’s Election impacted the Market Negatively?

    Nigerian Exchange gains 5.37% in Tinubu’s first week, highest for any President since return to Democracy

    The Nigerian Stock Market: Has Tinubu’s Election impacted the Market Negatively?

    The Nigerian Stock Market: Has Tinubu’s Election impacted the Market Negatively?

    Just in: Bandits attack President Buhari’s convoy in Katsina, two injured

    2015 vs 2023 Data: Nigeria situation went from bad to worse under Buhari

    Who is Hiba Abouk soon to be Achraf Hakimi’s ex-wife worth millions of dollars?

    Who is Hiba Abouk soon to be Achraf Hakimi’s ex-wife worth millions of dollars?

    LP won Obio-Akpor LGA Rivers State not APC as announced – INEC’s IReV

    APC won Abua-Odual and Ahoada East LGAs of Rivers State as announced – INEC’s IRev

    • Editorials
    • Book Club
    • Investogist Business Saturday
    • Op-ed
  • Sports
    • Football
  • Vacancies
No Result
View All Result
Investogist
No Result
View All Result
Home Financial Education

Financial Ratios: Liquidity and Leverage Ratios

Saturday, 27 February 2021, 11:55 pm
in Financial Education, Investogist Business Saturday, Opinion & Analysis
0
Financial Ratios: Liquidity and Leverage Ratios
Share Share Share Share Send as Email

In the previous article, I discussed Profitability Ratios and Market Ratios. In this article I will be discussing Liquidity Ratios and Leverage Ratios.

Liquidity ratios: These ratios are used to determine debtors’ ability to pay off current debt obligations without raising external capital. It measures a company’s ability to pay its short-term debt obligations and cash flows.

Common liquidity ratios are:

Current ratio: measures company’s ability to pay off its current liabilities (payable within one year) with its current assets like cash, accounts receivable and inventories. The higher the better.

Current ratio = Current assets/Current liabilities

Quick ratio (acid test): measures a company’s ability to meet its short-term debt obligations with its most liquid assets and thus excludes inventories from its current assets.

Quick ratio = (Current assets – Inventories)/Current liabilities

Note that if the company has prepaid expenses it will be subtracted from the current assets as well.

  • Read: DMO delivers new plan for debt management, amid rising fiscal pressures
  • Visit Investogist’s homepage for more articles

Cash ratio: the ratio is a stricter measure compared to current ratio and quick ratio. It measures a company’s ability to pay off short-term liabilities using its cash and cash equivalents.

Cash ratio = Cash and Cash equivalents/Current Liabilities.

Values less than one shows that the company cannot meet its short-term debt obligations and has a risk default.

Leverage ratios: measures the debt level of a company or how much of its capital comes from debt and its ability to pay off its debt when due.

Common leverage ratios are:

Debt Ratio (debt to asset ratio): measures the amount of a firm’s assets that are funded by debt. A value less than one shows that the company has more assets than its liabilities and that a greater part of its assets if funded by equity.

A value of more than one shows that the company has more liabilities than assets. A high ratio indicates that the firm might have a risk of default on its loans.

Debt ratio = Total liabilities / Total assets

Debt to equity ratio: measures the weight of company’s debt in relation to shareholder’s equity. A high value indicates that the company is highly indebted. Increased debt will result in increased interest expense which will in turn affect the firm’s earnings. There is also an increased chance of default and bankruptcy. Generally, debt to equity ratio of more than 2 is deemed risky for investors however, this can vary between industries.

Debt to equity ratio = Total liabilities / Shareholder’s equity

The interest coverage ratio shows how easily a company can pay its interest expenses, the higher the value, the better.

Interest coverage ratio = Operating income / Interest expenses

Gearing ratio measures the extent the capital of a business is financed by loans. The greater the reliance of a business on loan capital, the more ‘highly geared’ it is. The higher the borrowings of the business, the more interest must be paid and this will affect the ability of the company to pay dividends and retain profits.

A high gearing ratio indicates a high leverage and a riskier financing structure compared to a company with low gearing ratio.

Gearing ratio and leverage ratio are sometimes used interchangeably but some analysts use long term debt instead total liabilities in calculating gearing ratio. However, this has its own shortcomings because some companies hold lower debts to avoid interest payment while increasing their accounts payable and short-term borrowings.

In the next article I will be be discussing Efficiency ratios.

Ifunanya Ikueze
Ifunanya Ikueze

Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.

Related Posts:

  • Financial ratios
    Financial ratios: Efficiency ratios explained
  • Financial ratios
    Investogist Business Saturday – Financial Ratios
  • BitcoinRally
    Bitcoin Liquidity Crisis: Analyst optimistic about…
  • CBN HQ
    Steps to improve forex liquidity to be taken in next…
Previous Post

Investogist Business Saturday – Financial Ratios

Next Post

Financial ratios: Efficiency ratios explained

Next Post
Investogist Business Saturday – Financial Ratios

Financial ratios: Efficiency ratios explained

Please login to join discussion
  • Trending
  • Comments
  • Latest
MTN Nigeria to pay over N200 billion final dividend for 2022

List of Dividends announced in 2025, qualification and payment dates

Seplat Energy increases share capital, lists new shares

Seplat Energy increases share capital, lists new shares

FY 2020: UAC of Nigeria Plc posts 27.8% decline in profit after tax from continuing operations

UAC of Nigeria grows revenue by 32.6% to N110.4 billion in H1 2025

Custodian Investment Plc announces 25 kobo interim dividend

Custodian Investment Plc announces 25 kobo interim dividend

Shareholders of Linkage Assurance Plc approve share bonus distribution

Shareholders of Linkage Assurance Plc approve share bonus distribution

Aradel Holdings to list shares on NGX Main Board October 14

Aradel Holdings Plc reports N368.1 billion revenue for H1 2025

Custodian Investment Plc announces 25 kobo interim dividend

Custodian Investment Plc announces 25 kobo interim dividend

Seplat Energy increases share capital, lists new shares

Seplat Energy increases share capital, lists new shares

Quick Links

News
Economy
Markets
Business
Opinion & Analysis

Newsletter Signup

Contact Investogist

info@investogist.com

  • About Us
  • Terms & Conditions
  • Privacy Policy
  • Contact Us

Copyright © 2025 investogist.com, All Rights Reserved

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist

No Result
View All Result
  • News
    • Nigeria
    • Africa
    • World
  • Economy
    • Policies
    • Budgets
    • Economic Data
  • Business
    • Companies
    • Industry
    • Technology
  • Markets
    • Stocks/Equities
    • Forex
    • Rates & Bonds
    • Commodities
    • Cryptocurrencies
  • Travel & Tours
    • Arts & Entertainment
    • Nature
    • Places & People
  • Opinion & Analysis
    • Editorials
    • Book Club
    • Investogist Business Saturday
    • Op-ed
  • Sports
    • Football
  • Vacancies

Copyright © 2025 investogist.com, All Rights Reserved