Current ratio


 

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Current ratio

Indicator of short-term debt-paying ability. Determined by dividing current assets by current liabilities. The higher the ratio, the more liquid the company.

Current ratio

A financial ratio which shows how easily the company could pay its bills if all its creditors demanded payment at once. Calculated as: (current assets) divided by (current liabilities)In theory this figure should be at least 1, because if it's lower than 1 it means that the company does not have the liquidity to pay all its creditors straight away. That said, some companies, notably supermarkets, happily survive on current ratios of less than 0.5.As always, it's best to compare the ratio of one company with others in its sector. Over 1.5 suggests excessive caution on the part of management.For a more stringent version of the current ratio, see 'acid test'.



Similar Matches

Current account deficit

Current account deficit

Debits minus credits on current account. See deficit.


Noncurrent asset

Noncurrent asset

Any asset that is expected to be held for the whole year, not sold or exchanged, such as real estate, machinery, or a patent.


High current income mutual fund

High current income mutual fund

A mutual fund whose primary goal is to produce a high level of income by making higher-risk investments in instruments such as junk bonds.


Current income bonds

Current income bonds

Bonds paying semiannual interest to holders. Interest is not included in the accrued discount.


Current liabilities

Current liabilities

Debts owed by a company which are due for settlement within 12 months. These include creditors and taxes due etc.


Further Suggestions

Current account balance
Current yield
Current account surplus
Current income
Noncurrent liability
current income
Current account
Current assets
Current rate method
Current coupon issues
Current issue
current cost accounting
Balance on current account
high current income fund
Current prices
Net current assets
Current liabilities
Current production rate
Current maturity
Spontaneous Current Liabilities
Other current assets
Current account
Current coupon
Permanent Current Assets
Permanent spontaneous current Liabilities


 
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