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Typically we take a period of less than a year.
Current ratio interpretation example. Current assets are assets that are expected to be converted to cash within a normal operating cycle or one year. The current ratio is a liquidity and efficiency ratio that measures a firms ability to pay off its short-term liabilities with its current assets. Current ratioCurrent Assets Current Liabilities Current ratio 61897 77477 08 times As calculated above the current ratio for Walmart is 08 times.
Ratios may be interpreted by making comparison over a period of time ie. Accounts payables 15 million. This means that for each dollar of current liabilities Walmart has only 08 worth of current assets.
In simple language ratio is one number expressed in terms of another and can be worked out by dividing one number into the other. This means that the assets and the liabilities are supposed to be met in the short run. For example in 2011 Current Assets was 4402 million and.
Current assets 15 20 25 60 million. For example a ratio of 151 would mean that a business has 150 of current assets for every 1 of. If a business holds.
A current ratio of less than 1 could be an indicator the company will be unable to pay its current liabilities. For example current ratio may be studied along with liquid ratio. Current ratio 60 million 30 million 20x.
The higher the current ratio the more liquid a company is. If the current ratio computation results in an amount greater than 1 it means that the company has adequate current assets to settle its current liabilities. It is calculated by dividing current assets by current liabilities.
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