Question

In: Accounting

what is the another common term for the current ratio?

what is the another common term for the current ratio?

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Expert Solution

Answer:

Current ratio measures the capability of a business to meet its short-term obligations that are due withing a year. The ratio considers the weight of total current assest versus total current liabilities.It indicates the finacial health of a company and how it can maximize the liquidity of its current assets to settle debt and payables. Therefore, current ratio is also know as Working Capital Ratio.

Formula:

Current ratio or Working Capital ratio = Current Assets / Current Liabilities.

ekkarill92 answered 1 year ago
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