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    Current Ratio & Cash Ratio

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    Noman Khosa
    The current ratio measures a company's short-term liquidity by comparing its current assets to its current liabilities, with the ratio calculated as total current assets divided by total current liabilities. The cash ratio is another liquidity ratio that compares a company's total cash and cash equivalents to its current liabilities, showing how quickly it can repay short-term debt, with the ratio calculated as cash divided by current liabilities. Both ratios are important measures used by creditors to evaluate a company's financial position and ability to meet its short-term obligations.

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    Current Ratio & Cash Ratio

    Uploaded by

    Noman Khosa
    60 views1 page
    The current ratio measures a company's short-term liquidity by comparing its current assets to its current liabilities, with the ratio calculated as total current assets divided by total current liabilities. The cash ratio is another liquidity ratio that compares a company's total cash and cash equivalents to its current liabilities, showing how quickly it can repay short-term debt, with the ratio calculated as cash divided by current liabilities. Both ratios are important measures used by creditors to evaluate a company's financial position and ability to meet its short-term obligations.

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    Current Ratio & Cash Ratio

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    The current ratio measures a company's short-term liquidity by comparing its current assets to its current liabilities, with the ratio calculated as total current assets divided by total current liabilities. The cash ratio is another liquidity ratio that compares a company's total cash and cash equivalents to its current liabilities, showing how quickly it can repay short-term debt, with the ratio calculated as cash divided by current liabilities. Both ratios are important measures used by creditors to evaluate a company's financial position and ability to meet its short-term obligations.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    60 views1 page

    Current Ratio & Cash Ratio

    Uploaded by

    Noman Khosa
    The current ratio measures a company's short-term liquidity by comparing its current assets to its current liabilities, with the ratio calculated as total current assets divided by total current liabilities. The cash ratio is another liquidity ratio that compares a company's total cash and cash equivalents to its current liabilities, showing how quickly it can repay short-term debt, with the ratio calculated as cash divided by current liabilities. Both ratios are important measures used by creditors to evaluate a company's financial position and ability to meet its short-term obligations.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Current Ratio

    Current ratio may be defined as the relationship between current assets and current liabilities.
    This ratio is also known as "working capital ratio". It is a measure of general liquidity and is
    most widely used to make the analysis for short term financial position or liquidity of a firm. It is
    calculated by dividing the total of the current assets by total of the current liabilities.

    Formula:

    Following formula is used to calculate current ratio:

    Current Ratio = Current Assets / Current Liabilities

    Cash ratio

    The ratio of a company's total cash and cash equivalents to its current liabilities. The cash ratio is
    most commonly used as a measure of company liquidity. It can therefore determine if, and how
    quickly, the company can repay its short-term debt. A strong cash ratio is useful to creditors
    when deciding how much debt, if any, they would be willing to extend to the asking party.

    Formula:

    Following formula is used to calculate cash ratio

    Cash ratio = cash / current liability

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