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    Pratik Bhosale
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    The current ratio measures a company's ability to pay short-term obligations with its current assets by dividing current assets by current liabilities. The liquid ratio, also called the quick ratio, measures a company's ability to pay debts as they become due by dividing quick assets, which exclude inventory and prepaid expenses, by current liabilities. The document provides the current ratio and liquid ratio calculations for a company over three years from 2018-2019 to 2016-2017.

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    The current ratio measures a company's ability to pay short-term obligations with its current assets by dividing current assets by current liabilities. The liquid ratio, also called the quick ratio, measures a company's ability to pay debts as they become due by dividing quick assets, which exclude inventory and prepaid expenses, by current liabilities. The document provides the current ratio and liquid ratio calculations for a company over three years from 2018-2019 to 2016-2017.

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    6 views2 pages

    Accounts and Ratio

    Uploaded by

    Pratik Bhosale
    The current ratio measures a company's ability to pay short-term obligations with its current assets by dividing current assets by current liabilities. The liquid ratio, also called the quick ratio, measures a company's ability to pay debts as they become due by dividing quick assets, which exclude inventory and prepaid expenses, by current liabilities. The document provides the current ratio and liquid ratio calculations for a company over three years from 2018-2019 to 2016-2017.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    Current ratio and Liquid ratio

    • What is Current ratio and Liquid ratio:


    - The Current ratio is a liquidity ratio that measures a company’s ability to
    pay short term obligations or those due within one year.
    - It tells investors and analysts how a company can maximize the current
    assets on its balance sheet to satisfy its current debt and other payables.
    - Formula – Current Ratio = Current Assets
    Current Liabilities
    - The Liquid ratio tells one’s ability to pay off its debt as and when they
    become due.
    - In other words, this ratio tells how quickly a company can convert its
    current assets into cash so that it can pay off its liability on a timely basis.
    - Liquid ratio is also called Quick Ratio.
    - Formula – Liquid Ratio = Quick Assets
    Quick Liabilities
    Year Current Current Current Ratio= Liquid Ratio=
    Assets Liabilities Current Asset Quick Asset
    Current Liability Quick Liability
    2018-19 2124.35 1518.27 2124.35 / 1518.27 = 1.39 1386.89 / 1518.27 = 0.91
    2017-18 1958.84 1234.48 1958.84 / 1234.48 = 1.58 1252.64 / 1234.48 = 1.01
    2016-17 1785.61 1208.99 1785.61 / 1208.99 = 1.47 1182.99 / 1208.99 = 0.97

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