current ratio


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Current ratio

Indicator of short-term debt-paying ability. Determined by dividing current assets by current liabilities. The higher the ratio, the more liquid the company.

Cash Asset Ratio

A ratio of a company's cash and liquid assets to its total liabilities. A cash asset ratio measures a company's liquidity and how easily it can service debt and cover short-term liabilities if the need arises. As a result, potential creditors use this ratio in determining whether or not to make short-term loans. It is also called the liquidity ratio and the current ratio.

Cash Ratio

1. A ratio of a company's cash and liquid assets to its total liabilities. A cash ratio is a measure of company's liquidity and how easily it can service debt and cover short-term liabilities if the need arises. As a result, potential creditors use this ratio in determining whether or not to make short-term loans. It is also called the liquidity ratio and the cash asset ratio.

2. In banking, a ratio of a bank's cash and cash equivalents to its demand deposits. See also: Reserve requirement.

current ratio

A measure of a firm's ability to meet its short-term obligations. The current ratio is calculated by dividing current assets by current liabilities. Both variables are shown on the balance sheet. A relatively high current ratio compared with those of other firms in the same business indicates high liquidity and generally conservative management, although it may tend to result in reduced profitability. See also cash ratio, quick ratio.

current ratio

or

acid-test ratio

an accounting measure of a firm's ability to pay its short-term liabilities out of its quickly-realizable CURRENT ASSETS, which expresses the firm's liquid current assets (DEBTORS plus cash) as a ratio of CURRENT LIABILITIES. Sometimes called the ‘quick ratio’, this is a more stringent test of liquidity than the WORKING CAPITAL RATIO, because it excludes STOCK from CURRENT ASSETS on the grounds that STOCKS cannot be as readily convertible into cash to meet short-term debts as can DEBTORS where the goods or services have already been sold and only collecting the money remains.
References in periodicals archive ?
Successful marketing and sales promotions convert inventory into sales, which ultimately increases the company's cash position and narrows the gap between the firm's current ratio and its quick ratio.
H2: There is a negative and significant relationship between airline companies' current ratio and profit volatility.
Furthermore, working capital (WC) and Current Ratio (CR) are positively related to firm's profitability (ROA) that delineates the importance of excessive current assets to foster firm's profitability (ROA).
Current ratios of 200% for the companies whose liquidity rations are evaluated by Western finance councils and 150% for the countries with a high inflation are considered as sufficient.
These process parameters can be varied to achieve the desired performance of the FinFET device such as high on-off current ratio, low DIBL, and low SS.
Gayle still has some way to go before he can start dreaming of breaking records for the most league goals in a season - though his current ratio does put him on course to do so.
The existing standard on deferred taxes [Statement of Financial Accounting Standards (SFAS) 109, Accounting for Income Taxes] states that deferred taxes should be separated between their current and noncurrent portions because classifying them all as noncurrent would be confusing and lead to inappropriate current ratios. FASB changed this stance in the new standard because of its belief that the cost of separating deferred taxes between their current and noncurrent portions outweighs any benefits to financial statement users.
As of 30 April 2016, the company stated that its balance sheet included current assets of USD225.929m, including cash of USD25.498m, a current ratio of 2.5:1, gross debt of USD132m and stockholders' equity of USD447.6m.
LAHORE -- Federation of All Pakistan Universities Academic Staff Association (FAPUASA) has urged the federal government to restore 75 percent rebate in income tax from the current ratio of 40 percent.
In Regression 5, all the indicators of working capital management are excluded in order to separately measure the impact of Current Ratio (liquidity) on the Return on Assets.
The general strategy for transconductor linearization assumes the reduction of the transconductance to bias current ratio [2, 10].
And a Performance Dashboard is now available from the main screen that shows the current ratio of scheduled to unscheduled mold stops, and the number of molds in production and their maintenance status, based on cycles run.

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