Jul 11, 2022 · The current ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations or those due within one year. It tells investors and analysts how a company can maximize...
- Jason Fernando
- 1 min
Nov 26, 2022 · The Current Ratio formula is: Current Ratio = Current Assets / Current Liabilities Example of the Current Ratio Formula If a business holds: Cash = $15 million Marketable securities = $20 million Inventory = $25 million Short-term debt = $15 million Accounts payables = $15 million Current assets = 15 + 20 + 25 = 60 million
Current Ratio Formula = Current Assets / Current Liablities. If, for a company, current assets are $200 million and current liability is $100 million, then the ratio will be = $200/$100 = 2.0. Interpretation of Current Ratios If Current Assets > Current Liabilities, then Ratio is greater than 1.0 -> a desirable situation to be in.
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Current ratio = Current Assets/Current Liabilities. The current ratio is an indication of a firm's liquidity. Acceptable current ratios vary from industry to industry.  In many cases, a creditor would consider a high current ratio to be better than a low current ratio, because a high current ratio indicates that the company is more likely to ...
Jul 8, 2022 · The current ratio measures a company's capacity to pay its short-term liabilities due in one year. The current ratio weighs up all of a company's current assets to its current liabilities....
- Lydia Kibet
Jul 24, 2020 · The current ratio is used to evaluate a company's ability to pay its short-term obligations—those that come due within a year. The current ratio is calculated by dividing a company's current assets by its current liabilities. The higher the resulting figure, the more short-term liquidity the company has.