63,759 / 574,565 = 0.11 to 1 The cash ratio is a liquidity test to verify the available cash of a business to meet the needs of creditors and to pay their employees. The cash ration is figured by taking the cash plus the cash equivalent and dividing by the current liabilities (Bethel University, 2011). The cash ratio for Sally Beauty Holdings, Inc. is 0.11 to 1. This means the business has eleven cents cash for every one dollar in current liabilities. While this may seem to be a lower cash level, the company a sizeable amount of debit that can contribute to the lower cash ratio (Sally Beauty Holdings Form10K, 2018). Current Ratio 1,170,503 / 574,565 = 2.04 to 1 The current ratio is a liquidity test that correlates current assets and current liabilities. It is formulated by dividing the current assets by the current liabilities. Should a company have period where the fund flow became uneven with the working capital (Bethel University, 2011). The current ratio for Sally Beauty Holdings, Inc. 2.04 to 1, meaning the have $2.04 in current assets for every dollar in current liabilities. Some analyst may consider this to be slightly conservative, but the industry does need to be taken into account. Most beauty supplies are need for a specific purpose when bought but can unpredictable (Sally Beauty Holdings, …show more content…
It is figured by taking the cost of goods sold divided by the average inventory and can then be broken down in to an average days’ supply. Typically, a company makes a profit each time a piece of inventory is sold (Bethel University, 2011). The inventory turnover ratio for Sally Beauty Holdings, Inc. is 2.1 times. This means the inventory was sold twice per year, which is low but there is mixed industry standard on supplies and equipment. The average days’ supply for this ratio is 173.8 (Sally Beauty Holdings, Inc.,