Before getting to know a good liquidity ratio, let’s understand the term liquidity ratio. What is a liquidity ratio? Liquidity is the ability of a company to pay off current liabilities (Accounts Payable (AP), Accrued expenses, Short-term debt) with its current assets (Cash or equivalents,...
What is a good current ratio?The ideal current ratio varies by industry. However, an acceptable range for the current ratio could be 1.0 to 2. Ratios in this range indicate that the company has enough current assets to cover its debts, with some wiggle room. A current ratio lower than ...
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...
An increasingly higher ratio above two isn't necessarily better. A substantially higher ratio can indicate that a company isn't doing a good job of employing its assets to generate the maximum possible revenue. A disproportionately high working capital ratio is reflected in an ...
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...
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...
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**:电流动资产除以流动负债,符合流动比率的定义,正确。 - **选项B**:总资产除以总负债,属于资产负债率或其他整体负债指标,与短期偿债无关。 - **选项C**:流动资产占总资产的比例,反映资产结构,并非偿债...
Obviously, a higher current ratio is better for the business. 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 ...
Financial Ratio Analysis›What is the Current Ratio? 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 ...
“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...