The ratio used to measure the ability of a company to pay its short-term liabilities with the short-term assets is called as the current or liquidity ratio. It is calculated by dividing the current assets with the current liabilities.
The components of current ratio namely current assets and current liabilities are used to derive working capital which is the difference between current assets and current liabilities.
The ratio used to measure the ability of a company to pay its short-term liabilities with the short-term assets is called as the current or liquidity ratio. It is calculated by dividing the current assets with the current liabilities.
The components of current ratio namely current assets and current liabilities are used to derive working capital which is the difference between current assets and current liabilities.