Parliamentary Commission on Banking Standards and Quick ratio: Difference between pages

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imported>Doug Williamson
(Precis main recommendations of June 2013 report & add link to summary report.)
 
imported>Doug Williamson
(Add header.)
 
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(PCBS).
''Financial ratio analysis - liquidity ratios.''


(Current assets <i>less</i> Inventories) / Current liabilities.


The Parliamentary Commission on Banking Standards was established by the UK Parliament in 2012 to:
The quick ratio gives a very rough indication of the liquidity (or solvency) of the reporting entity.<br />
If the quick ratio were to fall below 1.0, this would indicate that the entity would not be able to meet its current liabilities out of its cash in hand and the proceeds of its other current assets (excluding inventories).


'''A.'''


Consider and report on:
<b>Example</b><br />
Current assets (excluding inventories) = £3m. <br />
Current liabilities = £4m. <br />


1. Professional standards and culture in the UK banking sector, taking account of regulatory and competition investigations into the LIBOR rate-setting scandal.
The Quick ratio is: <br />
= 3 / 4 <br />
= 0.75.


2. Lessons to be learned about:


2.1. Corporate governance.
The quick ratio is also known as the Acid test or the Acid test ratio.<br />
Inventories are sometimes also known as Stock.


2.2. Transparency.


2.3. Conflicts of interest.
== See also ==
* [[Balance sheet ratio]]
* [[Current assets]]
* [[Current liabilities]]
* [[Current ratio]]
* [[Inventory]]
* [[Liquidity]]
* [[Liquidity ratio]]
* [[Stock]]


2.4. Their implications for regulation and for UK Government policy.
[[Category:Accounting,_tax_and_regulation]]
 
[[Category:The_business_context]]
 
[[Category:Liquidity_management]]
'''B.'''
 
Make recommendations for legislative and other action.
 
The Commission's 2013 report proposes:
 
(1) Making the individual responsibility of senior bankers a reality.
 
(2) Reinforcing each bank's own responsibility for its own soundness and the maintenance of its standards.
 
(3) Creating better functioning and more diverse banking markets.
 
(4) Reinforcing regulators's responsibility to exercise judgement in deploying their powers.
 
(5) Specifying the responsibilities of the UK Government.
 
 
The Commission's report setting out its conclusions and recommendations can be downloaded below:
 
[http://www.publications.parliament.uk/pa/jt201314/jtselect/jtpcbs/27/27.pdf: PCBS final report June 2013]
 
 
==External link==
*[http://www.parliament.uk/bankingstandards UK Parliament: PCBS]
 
[[Category:Regulation_and_Law]]
[[Category:Control_and_Reporting]]
[[Category:Policy_and_Objectives]]
[[Category:The_Treasury_Professional]]

Latest revision as of 19:09, 3 February 2019

Financial ratio analysis - liquidity ratios.

(Current assets less Inventories) / Current liabilities.

The quick ratio gives a very rough indication of the liquidity (or solvency) of the reporting entity.
If the quick ratio were to fall below 1.0, this would indicate that the entity would not be able to meet its current liabilities out of its cash in hand and the proceeds of its other current assets (excluding inventories).


Example
Current assets (excluding inventories) = £3m.
Current liabilities = £4m.

The Quick ratio is:
= 3 / 4
= 0.75.


The quick ratio is also known as the Acid test or the Acid test ratio.
Inventories are sometimes also known as Stock.


See also

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