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The current ratio is calculated by dividing a company’s current assets by its current liabilities. Ratios of 1 or higher indicate short-term solvency.

A fundamental flaw in U.S. GAAP and IFRS financial reporting standards distorts the calculation of working capital and the current ratio, resulting in a significant understatement in most companies’ ...

Company balance sheets show the long-term financial health of the company, if investors know where to look. The current ratio is a measure of liquidity that lets investors know if a company can or ...

Profits may look good, but it's cash that pays the bills. As a small business owner, do you track the liquidity ratios of your business? You should be calculating these ratios on at least a weekly ...

Will Kenton is an expert on the economy and investing laws and regulations. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School ...

How well can current assets cover current liabilities? Sean Ross is a strategic adviser at 1031x.com, Investopedia contributor, and the founder and manager of Free Lances Ltd. Amy is an ACA and the ...

Liquidity ratios assess if a company can cover short-term debts with available assets. Key ratios include cash, quick, current, and operating cash flow ratios. A liquidity ratio over 1 suggests a ...