Friday, September 23, 2016

Current Ratio - Formula

Current Ratio Formula:

Formula for Calculation of Current Ratio


Current Ratio is the ratio or proportion between current assets and current liabilities. Current assets mean assets that can be expected to get converted into cash within a year and current liabilities are those that mature within 12 months. It is a measure of the business’s liquidity or the ability to meet short-term obligations.

Desirable Number:

Current ratio of two is minimum stipulated. Any number above means additional safety. A number below 2 indicates weakness.

Here we present the example of calculating the current ratio of NMDC Ltd., as per the balance sheet on 31st March 2015.

Example Showing Current Ratio Calculation of NMDC Ltd.

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