Asked by Zertashia Afzal on May 11, 2024
Verified
The current ratio is computed by dividing current liabilities by current assets.
Current Ratio
A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.
Current Liabilities
Financial commitments that need to be settled within a year or during the regular operation period of a company.
Current Assets
Assets that a company expects to convert into cash, sell, or consume within one year or its operating cycle, whichever is longer.
- Pinpoint the traits and calculation methods of significant financial ratios and understand their consequences on financial health and liquidity.
Verified Answer
Learning Objectives
- Pinpoint the traits and calculation methods of significant financial ratios and understand their consequences on financial health and liquidity.
Related questions
The Ability to Convert Assets into Cash Is Called Liquidity
Working Capital Is the Excess of the Current Liabilities of ...
Current Assets and Current Liabilities for Brayden Company Are as ...
The Current Ratio Is More Useful Than Working Capital in ...
The Denominator of the Return on Total Assets Ratio Is ...