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<p>Current Ration may be defined as, 'Indicator of a firm's ability to meet short-term financial obligations, it is the ratio of current assets to current liabilities. Though every industry has its range of acceptable current-ratios, a ratio of2:1 is considered desirable in most sectors. Since inventory is included in current assets, acid test ratio is a more suitable measure where saleability of inventory is questionable. Formula: Current assets/Current liabilities.'</p>
Current Ratio is the net liquidity of the firm and measures its immediate ability to meet its current liabilities. Stock is excluded as it takes time to dispose of and realize the cash.
The current ratio is a financial ratio that shows the proportion of current assets to current liabilities. The current ratio is used as an indicator of a company's liquidity. Liquidity ratios attempt to measure a company's ability to pay off its short-term debt obligations. This is done by comparing a company's most liquid assets (or, those that can be easily converted to cash), its short-term liabilities.
the proportion of current assets and current liabilities which reflects the company's current capability to pay off its short term obligations. the raio of most liquid assets against the current liabilities.
current ratio is a financial status measurement tool of a company. it represents the ratio of current asset and current liability of a company. although quick ratio is better, but current ratio also shows a compny's liquidity status, which is widely used by different types of stakeholder of a company.
It is used to measure organizational solvency, that is, ability to meet short term obligations as and when due. Quick ratio is more reliable as it describes ability to meet obligations faster without taking stock or inventory into consideration.
Current Asset / Current Liability
It is the ratio of current assets to current liability. The ideal current ration is 2:1, where company's current assets doulble to it current liabiliy, which mean company is highly liquid and it can meet its short term obligation at any time. However, moderate current ratio is 1:1, where current assits is equal to its current liabilities, which mean somehow company can meet its short term obligations.
If current ration is below 01, that's mean company is in danger because it has no enogh liquid funds to meet its current liabilities at a time.
we are all current asset count and all labilities than asset less labilities
Current Ration is the relationship between the current assets of a company and current liabilities. It is calculated as total current assets divided by the total current liabilities.
The current ratio is a liquidity ratio that measures whether or not a firm has enough resources to meet its short-term obligations
The current ratio is calculated by dividing current assets by current liabilities:
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