NORMAL BALANCE Definition

Bookmark and Share

NORMAL BALANCE, in accounting, is the side of an account, whether debit or credit, to which increases to the account are recorded.

Learn new Accounting Terms

RECEIVABLES TURNOVER see ACCOUNTS RECEIVABLE TURNOVER.

DOOMSDAY RATIO is related to the quick (acid test) ratio in that it is a conservative approach to debt coverage. The doomsday ratio only considers the cash on hand when evaluating if an entity can cover their current liabilities. The approach is that if the business were to go bankrupt today, would the business have enough cash on hand to cover current debts. The ratio is considered a good indicator of the cash cushion of safety. It may spot cash shortages, thereby assisting in avoiding a credit crisis. It is calculated: Cash divided by Current Liabilities.

Suggest a Term

Enter Search Term

Enter a term, then click the entry you would like to view.