MBATricks

Tips and Tricks about my MBA experience

Finance :: Liquidity Ratio :: Current Ratio

 

The current ratio help you to compare the current assets with the current liabilities (i.e. if we sell all the current assets, can we reimburse the current liabilities).

 

Current Ratio = Current Asset / Current Liabilities

 

Note that you can find the current asset and the current liabilities in the Balance Sheet.

 

The quick ratio is good when over 1.00. It means that the company can reimburse its short term liabilities by liquidating its short term assets.

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