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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 a company can pay a creditor back. However, if a company's current ratio is too high, it may indicate that the ...
The formula is: Current ratio: Current assets / Current liabilities ... Current ratio vs. quick ratio vs. debt-to-equity. Other measures of liquidity and solvency that are similar to the current ...
The formula describing a current divider is similar in form to that for the voltage divider. However, the ratio describing current division places the impedance of the considered branches in the denominator, unlike voltage division, where the considered impedance is in the numerator. This is because in current dividers, total energy expended is ...
Quick ratio. In finance, the quick ratio, also known as the acid-test ratio, is a liquidity ratio that measures the ability of a company to use near-cash assets (or 'quick' assets) to extinguish or retire current liabilities immediately. It is the ratio between quick assets and current liabilities. A normal liquid ratio is considered to be 1:1.
Ohm's law states that the electric current through a conductor between two points is directly proportional to the voltage across the two points. Introducing the constant of proportionality, the resistance, [ 1 ] one arrives at the three mathematical equations used to describe this relationship: [ 2 ] where I is the current through the conductor ...
A financial ratio or accounting ratio states the relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers ...
The difference between current assets and current liability is referred to as trade working capital. The quick ratio, or acid-test ratio, measures the ability of a company to use its near-cash or quick assets to extinguish or retire its current liabilities immediately. Quick assets are those that can be quickly turned into cash if necessary and ...
Development. Misconduct. v. t. e. In accounting, liquidity (or accounting liquidity) is a measure of the ability of a debtor to pay their debts as and when they fall due. It is usually expressed as a ratio or a percentage of current liabilities. Liquidity is the ability to pay short-term obligations.