The current ratio is found by dividing the firmâ€™s current assets by the firmâ€™s current liabilities. Current liabilities include the current portion of long-term liabilities, for example, interest payments on long-term debt that will become due within the year.

The current ratio gives us an idea about a firmâ€™s ability to cover its short-term liabilities. That is, over the year we can imagine that the firm will be selling its inventory and collecting accounts receivable and, with the cash it already has in the bank or invested in marketable securities, it will be able to use these proceeds to pay interest on its debt and pay its accounts payable when they become due.

When a firmâ€™s current ratio goes down, we may look at this trend as potentially signaling that the firm is entering financial distress. As a result, the firm may not be able to cover its short-term liabilities as easily as before.

# Current Ratio

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### Inventory Turnover Ratio

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### Current ratio of Kinetics, Inc.

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### Quick Ratio, Fixed Assets, Current Ratio Changes at SVF

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### Strengthen current ratio

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### Liquidity ratio current ratio and the acid test ratio

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### Deceptive Ratio Positions

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### Current Ratio and Quick Ratio

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### BMC Corp: Calculate ratios for ROE, quick, interest coverage, current, net profit margin

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### BMC's Ratios: Calculate ROE, quick ratio, interest coverage, current ratio, profit margin

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### Financial information for the current ratio measure

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### MA_U10_1-5: analysis, sales % increases, quick ratio, days in inventory, current ratio

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### Comparisons of acid-test ratio and current ratio

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### Financial ratio analysis.

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### Inventory Amount

ABC Company has a current ratio of 3.5 to 1 and an acid-test ratio of 2.8 to 1. Current assets equal $175,000 of which $5,000 consists of prepaid expenses. ABC Company's inventory must be: A) $30,000. B) $40,000. C) $50,000. D) $35,000.

### Current Ratio Firms for Violating Agreements

ABC Corporation's current ratio is currently 1.75 to 1. The firm's current ratio cannot fall below 1.5 to 1 without violating agreements with its bondholders. If current liabilities are presently $250 million, the maximum new short-term debt that can be issued to finance an equivalent amount of inventory expansion is: A) $ 41

### Current Ratio vs. Total Assets Turnover Ratio

Over the past year, K corporation has realized an increase in its current ratio and a drop in its total assets turnover ratio. However, the company's sales, quick ratio, and fixed assets turnover ratio have remained constant. What explains these changes? Could you share some of your ideas and opinions with us?

### Calculating current ratio

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### Revenue Recording and Current Ratio

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### Current ratio and Quick ratio...

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