This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
Ratio: Current Assets divided by Current Liabilities.
Example: The Round Number CompanyCurrent Assets = 132; Current Liabilities = 36 Current Ratio = 132/35 = 3.7 |
This ratio is a measure of the company’s liquidity. It looks at the ability to pay bills (Short-term Debt) out of the Current Assets.
Also known as the Working Capital Ratio.
See also Liquidity Ratios, Acid-Test Ratio, Cash Ratio.
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.