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...
Current Ratio = 1,99,000 / 1,25,000 = 1.59 Thus, the current ratio of Shine Enterprises is 1.59:1. This implies that the firm has Rs. 1.59 worth of assets to pay back every Re. 1 of liability. Components of the formula To calculate the current ratio of a company, users need to...
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
Current liabilities include accounts payable, wages, accrued expenses, accrued interest and short-term debt. The formula is: Current ratio: Current assets / Current liabilities Sample current ratios Let’s look at some examples of companies with high and low current ratios. You can find these numb...
Current Ratio is 3.5 : 1. Working Capital is Rs. 90,000. Calculate the amount of Current Assets and Current Liabilities. View Solution Q3 Assertion :Management of working capital refers to the management of current assets and current liabilities. Reason: But the major thrust of course, is ...
What is the Cash Reserve Ratio Formula? If the current CRR rate is 5%, a bank is required to store 5% of the total Net Demand and Time Liabilities or NDTL in the form of cash. The bank is not allowed to use this money for investment or lending. The Formula for the Reserve Ratio Re...
While payroll is not included in AP, it appears on the balance sheet as another of the business’s current liabilities. This amount is referred to as wages payable. Benefits of Accounts Payable Automation Businesses can streamline the accounts payable process with their accounting software tool. In...
What are accounting ratios? What is a liquidity ratio? What is the difference between the current ratio and the acid test ratio? What is the debt to equity ratio? What is the debt to total assets ratio? What is the quick ratio?
Debt Ratio Formula and Calculation As noted above, a company's debt ratio is a measure of theextent of its financial leverage. This ratio varies widely across industries. Capital-intensive businesses, such as utilities and pipelines tend to have much higher debt ratios than others like thetechnol...
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...