What is the formula for calculating the current ratio?

Many friends want to know what is the current formula for calculating the proportion. Come and have a look with me. The following is what is the calculation formula of current ratio compiled by me, for your reference only. Welcome to reading.

Calculation formula of flow ratio

Calculation formula of current ratio: current ratio = current assets ÷ current liabilities. Current ratio, also known as working capital ratio or real ratio, refers to the ratio of current assets to current liabilities of enterprises. Current ratio and quick ratio are both indicators reflecting the short-term solvency of enterprises.

The ratios reflecting the short-term solvency of enterprises mainly include current ratio, quick ratio, cash ratio and working capital allocation ratio. The calculation formula is as follows:

Current ratio = current assets/current liabilities;

Quick ratio = quick assets ÷ current liabilities = (monetary funds+trading financial assets+accounts receivable) ÷ current liabilities;

Cash ratio = monetary cash-current liabilities;

Working capital allocation ratio = working capital ÷ current assets.

Further reading: the difference between current ratio and quick ratio

1. The denominators of current ratio and quick ratio are current liabilities;

Both formulas are used to analyze the short-term solvency of enterprises.

2. The significance of current ratio lies in revealing the degree of protection of current assets to current liabilities and examining the safety of short-term debt repayment. Quick ratio is used to measure the ability of current assets of enterprises to immediately repay debts due;

Ratio can evaluate the liquidity of enterprise assets and their ability to repay short-term liabilities more accurately and reliably than current ratio because it excludes weak and unstable assets such as inventory.

3. The current ratio is current assets divided by current liabilities, which indicates the repayment ability of current assets to current liabilities.

Quick ratio is current assets minus inventory and then divided by current liabilities. Because the inventory cannot be cashed at any time, the quick ratio indicates whether the company has the ability to repay its current liabilities at any time.