What financial information does the current ratio measure?

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Since the current relationship works in conjunction with other liquidity ratios? Which financial ratios would you and explain how a bank would determine whether a company is in a position to be its commercial loan payments fair?

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This entry was posted on 03/02/2010 (Wednesday) at 5:09 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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1 Comment   »

  • dreygo64 says:
    03.02.10 at 17:33

    Current ratio is equal to current assets divided by current liabilities. If the current assets of a company are more than twice the current liabilities, then that company is generally considered to have good short-term financial strength. If current liabilities exceed current assets, then the company may have problems meeting its short-term obligations. This ratio is considered one of the indicators of the ability to pay bills in a timely fashion, though it is not the only measure.

    “Current” is the descriptive used for short turnaround assets and liabilities. Accounts receivable and payable…inventory…cash on hand are all examples of items that would be used in the current ratio.


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