0
If you want to improve your current ratio, these things may help:
- Collect outstanding accounts receivable
- Pay off some current liabilities
- Convert fixed assets to cash: sell unused equipment
- Increase current assets with new equity investments
- Take fewer owner withdrawals and reinvest profits back into the business
- Increase your cash balance with a long-term loan
Still curious? Ask our experts.
Chat with our AI personalities
Jordan
Ezra
BeauAdd your answer:
Earn +20 pts
Why is the quick ratio a more refined measure of liquidy than the current ratio?
Because inentories are generally the least liquid of the firms current assets
Is quick ratio a better measure of the firms liquidity than current ratio?
Yes because a quick ratio doesn't include inventory which must be sold before it can be used to pay for the companies current obligations. Of course you have to collect the cash in A/R before it can be used to pay for current obligations too but AR should be able to be converted to Cash much quicker than Inventory. A Cash Ratios, which doesn't include AR or Inventory is an even better measure of a firms liquidity than both the quick and current ratio.
How do you get a current ratio?
Formula for current ratio is as follows: Current ratio = Current assets / current liabilities
What is the meaning of the term current ratio?
Current Ratio is an indicator of a firm's ability to meet short-term financial obligations, it is the ratio of current assets to current liabilities. Though every industry has its range of acceptable current-ratios, a ratio of 2:1 is considered desirable in most sectors. Since inventory is included in current assets, acid test ratio is a more suitable measure where saleability of inventory is questionable. Formula: Current assets divided by Current liabilities.Refer to link below
The ratio of current assets to current liabilities is called the?
The ratio between current assets to current liability is called "Current Ratio".
