Liquidity Ratios

There are different ratios that are used in business. A current ratio is a formula that shows the relationship between what the business has payable, and what they have as liquidity. It may be easier to think of current liability as current payables. Formulas for Liquidity Ratios The formula for the current ratio is Current assets / current liabilities = current ratio The current ratio shows if the company has enough potential cash to pay any debts that they owe. The current ratio is usually based off of a year and should be above or between 1-1.25, below this number… Continue reading Liquidity Ratios