|
Current Ratio
|
Current
Assets (CA) |
|
Current Liabilities (CL) |
Benchmark: 0.7
Current assets divided by current liabilities
i.e. the ability (in theory) of a company to meet its short term debt on demand,
for instance, if it went into receivership.
Strictly speaking this ratio should be greater
or equal to 1, although in practice a much lower value is widely accepted (one
of the effects of Just-In-Time).
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