Current Ratio

Current Ratio - Current Ratio The Current Ratio indicates...

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Current Ratio 1 The Current Ratio indicates the degree of coverage provided to short-term (ST) creditors if ST assets were to be liquidated. Current Assets Current Liabilities Current Ratio =
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Quick Ratio 2 Also known as the Acid-Test Ratio, the Quick Ratio excludes inventory in the numerator since inventory is the furthest removed from cash. Current Assets - Inventory Current Liabilities Quick Ratio =
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Net Working Capital 3 Net Working Capital is a dollar-based solvency measure. The larger the amount, the more solvent the firm. It is an absolute measure, not a relative measure, so it ignores scale and trends.
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4 Net Working Capital commingles operating and financial accounts. A variation separates Net Working Capital into two pieces: Working Capital Requirements (WCR) Operating CA – Operating CL Net Liquid Balance (NLB)
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5 Net Working Capital = WCR + NLB If positive, a portion of Current Assets is financed with Current Assets
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Current Ratio - Current Ratio The Current Ratio indicates...

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