Measures the ability of a business to meet its liabilities.
Current assets
Current Ratios = -------------------------------------------
Current Liabilites
It is a ratio to calculate the amount of current assets to current liabilities. It shows how well a business will be able to meet its current debts if they were all called in at once without selling off any of their non-current assets.
A common figure would be 1.6:1 Meaning that when the debts are called in the business will be able to pay them off and have money left over to maintain flexibility.
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