The use of mathematics in the preparation of financial statements is of paramount importance. Several formulas exist, and one such formula is the use of ratios. One ratio that might be of value to Centene Corporation may be the Liquidity – Quick Ratio or otherwise known as the Acid – Test Ratio. It is designed or used to determine an organization’s short-term obligation with its most liquid assets. A quick ratio is a conservative number, but it gives the reader the ability to determine if the organization can pay its obligations.
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The accrual concept provides a comprehensive and more accurate picture of events that affect the financial statement. The financial ratios tell individuals about the company’s ability to meet its obligations, which is a measure of its financial health.
Fortune. (2014). Fortune 500 2014. Retrieved from http://fortune.com/fortune500/