Learn about current ratio in accounting with a simple example. You can also learn other important accounting terms from Zoho Books' accounting dictionary.
What is the current ratio? What is the difference between the current ratio and the acid test ratio? What are accounting ratios? What is the difference between the current ratio and the quick ratio? What is a liquidity ratio? What is the quick ratio?
The current ratio is a financial ratio that shows the proportion of a company’s current assets to its current liabilities. The current ratio is often classified as a liquidity ratio and a larger current ratio is better than a smaller one. However, a company’s liquidity is dependent on conv...
The current ratio is aliquidityandefficiency ratiothat measures a firm’s ability to pay off its short-term liabilities with its current assets. The current ratio is an important measure of liquidity because short-term liabilities are due within the next year. ...
Current ratio, also known as liquidity ratio and working capital ratio, shows the proportion of current assets of a business in relation to its current liabilities. Formula of current ratio : Current Assets / Current Liabilities.
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During a loss, the insurance limit and the required amount to be used for insurance based on the coinsurance percentage are compared and must have a ratio equal to or greater than one, else, a penalty will be given. How Property Coinsurance Works Photo from pxfuel.com To better understand ...
What is the current ratio? What is the difference between the current ratio and the quick ratio? What is a current liability? What is the difference between the current ratio and the acid test ratio? What are the typical items reported as current liabilities?
For example, a company may have a very high current ratio, but itsaccounts receivable may be very aged, perhaps because its customers pay slowly, which may be hidden in the current ratio. Some of the accounts receivable may even need to be written off. Analysts also must consider the quali...
What Is the Current Ratio? Thecurrent ratiois a measure ofliquiditythat compares all of a company’s current assets to its current liabilities. If the ratio of current assets over current liabilities is greater than 1.0, it indicates that the company has enough available to cover its short-ter...