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What is the Meaning of Current ratio?
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Answer / viswanatha reddy
Definition
An indication of a company's ability to meet short-term debt
obligations; the higher the ratio, the more liquid the
company is. Current ratio is equal to current assets divided
by current liabilities. If the current assets of a company
are more than twice the current liabilities, then that
company is generally considered to have good short-term
financial strength. If current liablities exceed current
assets, then the company may have problems meeting its
short-term obligations. For example, if XYZ Company's total
current assets are $10,000,000, and its total current
liabilities are $8,000,000, then its current ratio would be
$10,000,000 divided by $8,000,000, which is equal to 1.25.
XYZ Company would be in relatively good short-term financial
standing.
Formula:
Following formula is used to calculate current ratio:
[Current Ratio = Current Assets / Current Liabilities]
Or
[Current Assets : Current Liabilities]
| Is This Answer Correct ? | 10 Yes | 0 No |
Answer / ganesh y kambli.
Mr. P.Sheshu Kumar I think your answer is wrong coz you have written the formula of "WORKING CAPITAL" & the question is What is the Meaning of Current ratio? So, pls if u don't know right answer then pls don't give wrong direction to someone.
Now I'm coming to answer,
Current Ratio = Current Assets / Current Liabilities
Current Ratio shows us Short Term Stability of Co.
And its Standard is 2:1
If I m wrong then Viewers pls give me correct answer.
ganesh15081984@gmail.com
| Is This Answer Correct ? | 3 Yes | 0 No |
Answer / p.sheshu kumar
current ratio = current assets - current liabilities
| Is This Answer Correct ? | 1 Yes | 4 No |
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