» xpandify.net

Find and share spotify playlists

working capital ratio

Current Ratio:
CR also called working capital ratio, is the most widely used of all analytical devices based on the balance sheet. It matches the total current assets of the firm to its current liabilities.

Formulation:
CR=CA/CL...
(Where, CR=current ratio,
CA=Current assets,
CL=Current liabilities.)

Current assets=cash in hand or at bank + marketable securities + other short term high quality investments + bills receivable + prepaid expenses + work in progress + sundry debtors + inventories.

Current liabilities= sundry creditors + bills payable + outstanding & accrued expenses + income tax payable.