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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...
The current ratio (also known as the current asset ratio, the current liquidity ratio, or the working capital ratio) is a financial analysis tool used to determine the short-term liquidity of a business.
The current ratio or working capital ratio is a ratio of current assets to current liabilities within a business. In other words, it is defined as the total current assets divided by the total current liabilities.
The formula for current ratio is: Current ratio = Current assets ÷ Current liabilities. Current assets include cash and cash equivalents, marketable securities, short-term receivables, inventories, and prepayments.
The current ratio, also known as the working capital ratio, measures the capability of a business to meet its short-term obligations that are due within a year. The ratio considers the weight of total current assets versus total current liabilities.
The current ratio is liquidity and efficiency ratio that calculates a firm's ability to pay off its short-term liabilities with its current assets. The current ratio is an important measure of liquidity because short-term liabilities are due within the next year.
Current Ratio Definition. The current ratio is a liquidity ratio that is used to calculate a company's ability to meet its short-term debt and obligations, or those due in a single year, using assets available on its balance sheet. It is also known as working capital ratio.
The current ratio indicates a company's ability to meet its short-term obligations. The formula is current assets divided by current liabilities to equal the...
The current ratio is a financial metric that measures the liquidity of a company by comparing the current assets belonging to a company to its current liabilities to determine if the liquid assets are sufficient to meet its short-term obligations coming due within twelve months (or one-year).
Current ratio definition. The current ratio is a type of liquidity ratio that measures a business’ ability to pay upcoming bills and make loan repayments. You might also see it called the working capital ratio. It’s a broader measure of liquidity than quick ratio because it factors in assets that can take longer to liquidate – like inventory.