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It is the ratio of a firm's current assets to its current liabilities, Current Assets / Current Liabilities . The current ratio is an indication of a firm's accounting liquidity. Acceptable current ratios vary across industries. [1] Generally, high current ratio are regarded as better than low current ratios, as an indication of whether ...
Current ratio vs. quick ratio vs. debt-to-equity Other measures of liquidity and solvency that are similar to the current ratio might be more useful, depending on the situation.
For a corporation with a published balance sheet there are various ratios used to calculate a measure of liquidity. [1] These include the following: [2] The current ratio is the simplest measure and calculated by dividing the total current assets by the total current liabilities. A value of over 100% is normal in a non-banking corporation.
Current ratio = current assets / current liabilities. Current ratio = $162.0 billion / $77.9 billion. Current ratio = 2.08. A current ratio above 1.0 indicates that a company can keep up with its ...
The current ratio is calculated by dividing total current assets by total current liabilities. [3] It is frequently used as an indicator of a company's accounting liquidity, which is its ability to meet short-term obligations. [4] The difference between current assets and current liability is referred to as trade working capital.
The CROCI/WACC ratio is basically the same metric signaling value creation or destruction. If the ratio is higher than 1, a company creates value, and it destroys value if the ratio is below 1. CROCI can be compared to a company's economic price to book (broadly equivalent to a company's Tobin's Q) to calculate an Economic P/E.
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Debt-service coverage ratio (DSCR) looks at a company's cash flow versus its debts. The ratio is used when gauging a business's ability to pay off current loans and take on future financing.