The current ratio is a financial metric used to evaluate a company's liquidity and short-term solvency by comparing its current assets to its current liabilities.
The current ratio measures a company's ability to pay their short-term obligations with their current assets. It is: current assets / current liabilities = 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 liquidity is dependent on conv...
As a business owner, it’s important to know if your business can pay its short-term and long-term obligations. To measure this, you can use the ratio most commonly used in the business world, the current ratio.Why Is the Current Ratio Essential? The current ratio shows your business’s...
What is the Current Ratio equal to?( ) A、Current Asset / Current Liability B、(Current Asset – Inventory) / Current Liability C、Cash / Current Liability D、(Total Asset – Total Equity) / Total Asset
Why the current ratio matters You’ll want to consider the current ratio if you’re investing in a company. When a company’s current ratio is relatively low, it’s a sign that the company may not be able to pay off its short-term debt when it comes due, which could hurt its credit...
Calculate the value of Current assets, Liquid assets and Inventories. (b) Current Assets of a Company are Rs. 3,60,000. Its Current ratio is 2.4:1 and acid test ratio is 1.3:1. Calculate the value of Current liabilities, liquid assets and inventories. (c) Working Capital of a company...
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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 that current assets are equal to current liabilities and that the business is just able to cover all of its short-term obligations. ...
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...