For example, a company may have a very high current ratio, but its accounts receivable may be very aged, perhaps because its customers pay slowly, which may be hidden in the current ratio.

The current ratio assumes, for example, that inventory will always be turned into cash within a year. This may be true for many companies, but in certain industries and situations, inventory isn ...

Current ratio example Let's take a look at a real-life example of how to calculate the current ratio based on the balance sheet figures of Amazon for the fiscal year ending 2019. The current ...

What Is the Financial Ratio Used to Assess a Company's Liquidity?. No matter how... Current ratio = Current assets/Current liabilities = $420,000/$205,000 = 2.1 Business managers, financial ...

For example, consider that inventory and prepaid ... both are excluded from the asset portion of the quick ratio. Quick Ratio vs. Current Ratio The quick ratio is more conservative than the ...

The current ratio, for instance ... A company may be illiquid but solvent, for example, or vice-versa. No single ratio will ...

Why Is It Important? Investors can compare a stock’s current ratio to other companies within its industry. Stocks with a higher current ratio will have an easier time paying near-term ...

An acid-test ratio that is notably lower than the working capital ratio often means that inventory makes up a large proportion of current assets, as occurs in retailing, for example. Look Out for ...

Returning to the example above, let’s take a look at how Apple’s current ratio (as of March 27th, 2021) compared to its quick ratio of 0.83. To calculate the current ratio, we’ll include all ...