Current ratio
Current ratio is a liquidity ratio; current assets are divided by current liabilities to indicate a company's ability to pay its short-term debt. This ratio does not provide as much certainty as the acid test ratio.
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Current ratio. A liquidity ratio; current assets are divided by current liabilities to indicate a company's ability to pay its short-term debt. This ratio does not provide as much certainty as the acid test ratio.
Related concepts
- Accounting (alternatively known as accountancy) is management of financial data, information, and knowledge about financial transactions of legal entities. Accountancy tends to include bookkeeping and, depending on a particilar enterprise, may also include quatitative analysis of financial data in the bookkeeping system and/or business intelligence.
