Last answered:

15 Mar 2023

Posted on:

12 Mar 2023


Resolved: Computing average daily expenses

Why taxes are not included in the cash expenses for computing average daily expenditure?

1 answers ( 0 marked as helpful)
Posted on:

15 Mar 2023


Hi Aman, 

the average daily expenditures comprise daily operating expenses that a company generates. 

The purpose of liquidity ratios is to evaluate a firm's liquidity position on an ongoing (daily, monthly) basis. 

Taxes are calculated at the year-end, based on accounting profits. Hence, they are not considered operating expenses and do not impact most liquidity ratios. 

I think this helps. Please let me know if you have any other concerns. 


The 365 Team

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