“The current ratio is one of the oldest and best-known measures of short-term financial strength. The ratio determines whether current assets are sufficient to pay current liabilities a current ratio for a general manufacturing company above 2.0 is considered good. It means that the company has...
Definition of Current 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 ...
Generally speaking, a “good” current ratio is considered to be within 1.5 and 2.0. If your current ratio is greater than 2.0, the business could have a surplus of capital that isn’t being used effectively. Any short-term assets in surplus of a 2.0 current ratio represents an opportunity...
The current ratio shows a company’s ability to meet its short-term obligations. The ratio is calculated by dividing current assets by current liabilities. An asset is considered current if it can be converted into cash within a year or less, while current liabilities are obligations expected ...
Definition: The current ratio is a financial ratio that measures a company’s ability to pay off its current obligations with current assets. Management and external users analyze this ratio to judge the liquidity of the company as well as its efficiency.What...
A. Current Assets / Current LiabilitiesB. Total Assets / Total LiabilitiesC. Current Assets / Total AssetsD. Current Liabilities / Total AssetsAnswer: A 相关知识点: 试题来源: 解析 A 流动比率(Current Ratio)用于评估企业短期偿债能力。其公式为: **流动资产 / 流动负债** - **选项A**:电流动...
The company has a current ratio of 2.0, which would be considered a good ratio value in most industries. While the value of acceptable current ratios varies from industry, a good ratio would often be between 1.5 and 2. Why the current ratio is important A company’s current ratio provides...
Try to keep your business’s current ratio greater than one – indicating that you have more than enough liquid assets to cover the short-term debts. Liquidity Ratio FAQs What is considered a good liquidity ratio? Any value that is greater than 1 indicates that a company is in a good fina...
A good current ratio is between 1.2 to 2, which means that the business has 2 times more current assets than liabilities to covers its debts.A current ratio below 1 means that the company doesn’t have enough liquid assets to cover its short-term liabilities. A ratio of 1:1 indicates ...
or its ability to generate enough cash to pay off all debts should they become due at once. Although they’re both measures of a company’s financial health, they’re slightly different. The quick ratio is considered more conservative than the current ratio because its calculation factors...