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

Current account

Net flow of goods, services, and unilateral transactions (gifts) between countries.


Current prices

Current prices

Refers to prices in the present, rather than in some base year; e.g., "GDP at current prices" means GDP as measured, in contrast to real GDP, or "GDP at XXXX prices," where the latter is measured in the prices of year XXXX.


Current coupon

Current coupon

A bond selling at or close to par, that is, a bond with a coupon close to the yields currently offered on new bonds of a similar maturity and credit risk.


Current liabilities

Current liabilities

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


Balance on current account

Balance on current account

A country's receipts minus payments for current account transactions. Equals the balance of trade plus net inflows of transfer payments.


Further Suggestions

Other current assets
Current issue
Current liabilities
Current account deficit
Current rate method
Current yield
Current account balance
Current account surplus
Noncurrent liability
Current assets
Current coupon issues
High current income mutual fund
current cost accounting
current account
Current account
Net current assets
Noncurrent asset
current assets
Permanent spontaneous current Liabilities
Current maturity
current income
Spontaneous Current Liabilities
Current income
Permanent Current Assets
Current production rate


 
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