current ratio unit 8/9

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taskey
taskey Registered Posts: 1,800 Beyond epic contributor 🧙‍♂️
has anyone got an easy way to write this, as the example is have is x:1

i am trying to do some quick memory cards and just wondered what everyone else has done

Thanks

Tracy

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  • Paul24
    Paul24 Registered Posts: 578 Epic contributor 🐘
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    Current Assets
    Current Liabilities


    This is a liquidity ratio. It shows how many times your current assets cover your current liabilities and should therefore be at the very least 1.
  • taskey
    taskey Registered Posts: 1,800 Beyond epic contributor 🧙‍♂️
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    thanks - that is what i wrote, but it seemed a bit too simple.

    Tracy
  • [Deleted User]
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    Quick Current Ratio (acid test)

    = (Current Assets - Stock) / Current Liabilities

    I prefer this one as I believe that adding the stock doesn't give a true picture of the debtors strength against the creditors.
  • brett316
    brett316 Registered Posts: 48 Regular contributor ⭐
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    Current Ratio should ideally be 2:1 because of stock being difficult to turn into cash which is why acid test gives a better picture and should be 1:1 but also if current ratio is greater than 2:1 then the company is maybe not investing its assets properly
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