CURRENT  RATIO

It is a quantitative relationship between current assets and current liabilities. It indicates an enterprise’s ability to meet the current obligation as expressed in terms of current liabilities.  Current assets refer to liquid resources and must be sufficient enough to pay current liabilities as and when they mature.

Enter Current Assests (in Rs.) *   Enter Current Liabilities (in Rs.) *     Current Ratio 0 A Current Ratio of 1.0 or greater is considered acceptable for most businesses. A high ratio (greater than 2.0) indicates excessive current assets in the form of inventory, and underemployed capital. A low ratio (less than 1.0) indicates difficulty to meet short-term financial obligations, and the inability to take advantage of opportunities requiring quick cash.

Definitions:

Total Current Assets This is any cash or asset that can be quickly turned into cash. This includes prepaid expenses, accounts receivable, most securities and your inventory.

Total Current Liabilities This is a liability in the immediate future. This includes wages, taxes, and accounts payable.