Interested to Buy Any Domain ? << Click Here >> for more details...
what is current ratio and how it is calculated
- 1 Answers
- 4874 Views
- I also Faced
- E-Mail Answers
Answer / james. e
It is a liquidity ratio that measures a company's ability
to pay short-term obligations.
The Current Ratio formula is:
Current Ratio=current assets/current liabilities
Also known as "liquidity ratio", "cash asset ratio"
and "cash ratio".
The ratio is mainly used to give an idea of the company's
ability to pay back its short-term liabilities (debt and
payables) with its short-term assets (cash, inventory,
receivables). The higher the current ratio, the more
capable the company is of paying its obligations.A ratio
under 1 suggests that the company would be unable to pay
off its obligations if they came due at that point. While
this shows the company is not in good financial health, it
does not necessarily mean that it will go bankrupt - as
there are many ways to access financing - but it is
definitely not a good sign.
This ratio is similar to the acid-test ratio except that
the acid-test ratio does not include inventory and prepaids
as assets that can be liquidated.
| Is This Answer Correct ? | 5 Yes | 0 No |
Short Answer on __________Event
What accounting records must a company charity keep, and for how long?
What is State Cheque?
How can a profit & loss appropriation account have opening & closing balance ?what would be journal entry for it?
how to Pass Paid salary ESI & EPF ,TDS entry In tally
what is the document spliting?
Give a brief explanation of the fundamental accounting concept of prudence
what is the point of sale
Queries for Big4 Articleship : Stipend and tenure of articleship period. Any leave period for preparation for exams.
What exactly balance sheet depicts
WHAT IS MIBOR? KINDLY EXPLAIN IN DETAILS?
what are tangible assets?
Audit 
