BNET Business Dictionary
Business Definition for: Current Ratio
- a ratio of current assets to current liabilities, used to measure a company's liquidity and its ability to meet its short-term debt obligations.
Example: The current ratio formula is a simple one:Current assets / Current liabilities = Current ratioCurrent assets are the ones that a company can turn into cash within 12 months during the ordinary course of business. Current liabilities are bills due to be paid within the coming 12 months.
For example, if a company's current assets are $300,000 and its current liabilities are $200,000, its current ratio would be300,000 / 200,000 = 1.5As a rule of thumb, the 1.5 figure means that a company should be able to get hold of $1.50 for every $1.00 it owes.
The higher the ratio, the more liquid the company. Prospective lenders expect a positive current ratio, often of at least 1.5. However, too high a ratio is cause for alarm too, because it indicates declining receivables and/or inventory—which may mean declining liquidity.
Additional Resources
- Assessing Current Ratio
- Current ratio is a measure of liquidity, which compares a company’s current assets with its current liabilities.Current ratio is a favored test among banks and lenders because it reveals whether a company is generating enough cash to pay its short-term creditors. What to DoThe ratio divides current assets by...
- Articles 2007-12-12
- Sell/Buy Ratio - Nasdaq And Nyse
- SELL/BUY RATIO NASDAQ AND NYSE The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of...
- Research articles 2001-07-02
- The Sell:Buy Ratio - NYSE/NASDAQ
- THE SELL:BUY RATIO (NYSE/NASDAQ) The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall...
- Research articles 2001-07-23
- The Sell:Buy Ratio - NYSE/NASDAQ
- THE SELL:BUY RATIO (NYSE/NASDAQ) The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall...
- Research articles 2001-07-09
- WORKING CAPITAL: A MODERN APPROACH.(Dell Computer Corp.)(Brief Article)
- Working capital, defined as current assets CA minus current liabilities CL, is often measured using the current ratio CA divided by CL, or the quick or "acid test" ratio (CA minus inventory, divided by CL). Good performance was tradit Working capital, defined as current assets CA...
- Research articles 2001-10-01
- Sell/Buy Ratio - Nasdaq And Nyse
- The Selt/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall market conditions with both...
- Research articles 2001-06-11
- Sell/Buy Ratio - Nasdaq And Nyse
- The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall market conditions with both...
- Research articles 2001-05-14
- Sell/Buy Ratio - Nasdaq And Nyse
- The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall market conditions with both...
- Research articles 2001-05-07
- Sell/Buy Ratio - Nasdaq And Nyse
- The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall market conditions with both...
- Research articles 2001-07-30
- Sell/Buy Ratio - Nasdaq And Nyse
- The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall market conditions with both...
- Research articles 2001-04-23
- Sell/Buy Ratio - Nasdaq And Nyse
- The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall market conditions with both...
- Research articles 2001-05-21
- Sell/Buy Ratio - Nasdaq And Nyse
- The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall market conditions with both...
- Research articles 2001-07-16
- Sell/Buy Ratio - Nasdaq And Nyse
- The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall market conditions with both...
- Research articles 2001-06-18
- Sell/Buy Ratio - Nasdaq And Nyse
- The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall market conditions with both...
- Research articles 2001-04-30
- The Sell: Buy Ratio - NYSE/NASDAQ
- The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall market conditions with both...
- Research articles 2001-06-25
- Sell/Buy Ratio - Nasdaq And Nyse
- The Sell/Buy Ratio is a calculated number of traders for the NASDAQ and NYSE. The computations are based on a distinct number of buyers and sellers for any given week. We list the NASDAQ and NYSE separately as a ratio because of the unpredictability of overall market conditions with both...
- Research articles 2001-06-04
- Analysis Of Financial Statements
- Financial ratios, an important component of a financial statement, are a quick way of understanding a firm. There are three ways one can compare the ratios. This paper brings out the classification of financial ratios?liquidity ratios, activity/productivity ratios, debt/risk ratios, profitability ratios, and market value ratios. The paper gives clear...
- Presentations 2003-01-01
- Sharpening The Sharpe Ratio
- The question that article address is what happens when "excess returns" head south? Well, investors start bailing out and the Sharpe ratio is harder to interpret. Excess return is typically calculated by subtracting the T-bill rate of return from the asset being analyzed. The higher the Sharpe ratio the better....
- White papers 2003-01-01
- Capital Ratios and Property-Liability Insurer Insolvencies
- This paper analyzes the ability of two different risk-based capital ratios to predict property liability insurer insolvencies. The first ratio is the National Association of Insurance Commissioners NAIC risk-based capital RBC ratio and the second ratio is Best's Capital Adequacy BCA ratio, produced by the private rating agency, A.M. Best...
- White papers 2000-01-01
- Financial Pricing Models for Property-Casualty Insurance Products: Implementation and Presentation
- This paper deals with implementation of a return on capital pricing model and with the presentation of pricing indications to insurance practitioners. Given the pricing assumptions, this paper shows the loss ratio or combined ratio needed to achieve a target return on capital. The target loss ratio or combined ratio...
- White papers 2004-03-10
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