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The details below are an excerpt from ABC Limited’s balance sheet. We compute the company’s working capital ratio from the information below: Current assets = $100,000. Current liabilities = $25,000. As per the current ratio formula, Current Ratio = Current assets/ Current liabilities. = 100,000 / 25,000 = 4.
Apr 15, 2019 · The current ratio compares all of a company’s current assets to its current liabilities. These are usually defined as assets that are cash or will be turned into cash in a year or less, and liabilities that will be paid in a year or less. The current ratio is sometimes referred to as the “working capital” ratio and helps investors ...
Jul 26, 2020 · Current Ratio. Current ratio is a liquidity ratio which measures a company's ability to pay its current liabilities with cash generated from its current assets. It is calculated by dividing current assets by current liabilities. Current assets are assets that are expected to be converted to cash within a normal operating cycle or one year.
Jun 13, 2024 · Liquidity ratios measure a company's ability to pay debt obligations and its margin of safety through the calculation of metrics including the current ratio , quick ratio and operating cash flow ...
Mar 22, 2023 · To apply the current ratio formula, we need to arrive at the total current assets and total current liabilities. Calculation of the total current assets and current liabilities is tabled below. Applying the formula of current ratio, we get: Current Ratio = 1,99,000 / 1,25,000 = 1.59.
Apr 2, 2019 · Based on the above-mentioned figures for Walmart, the current ratio for the retail giant is calculated as $59.66 / $78.52 = 0.76. Similarly, technology leader Microsoft Corp. ( MSFT) reported total current assets of $169.66 billion and total current liabilities of $58.49 billion for the fiscal year ending June 2018.
Interpretation & Analysis. Current ratio is a measure of liquidity of a company at a certain date. It must be analyzed in the context of the industry the company primarily relates to. The underlying trend of the ratio must also be monitored over a period of time. Generally, companies would aim to maintain a current ratio of at least 1 to ensure ...
