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Wednesday, April 6, 2011

Current Ratio Formula & Example

Definition: Current ratio (also known as working capital ratio) is the ratio of current assets of a company to its current liabilities. It is used to assess the working capital of a firm.

Formula:
Current ratio = Current Assets / Current Liabilities

* Current assets are the assets which can either be converted to cash or used to pay current liabilities within one year. Current liabilities are

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