{"id":3163,"date":"2019-12-21T14:57:28","date_gmt":"2019-12-21T14:57:28","guid":{"rendered":"https:\/\/commerceiets.com\/?p=3163"},"modified":"2019-12-21T14:57:28","modified_gmt":"2019-12-21T14:57:28","slug":"current-ratio-formula","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/current-ratio-formula\/","title":{"rendered":"CURRENT RATIO FORMULA"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/current-ratio-formula\/#CURRENT_RATIO_FORMULA\" title=\"CURRENT RATIO FORMULA\">CURRENT RATIO FORMULA<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/current-ratio-formula\/#_INTERPRETATION_OF_THE_RATIO\" title=\"&nbsp;INTERPRETATION OF THE\nRATIO\">&nbsp;INTERPRETATION OF THE\nRATIO<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/current-ratio-formula\/#IDEAL_CURRENT_RATIO\" title=\"IDEAL CURRENT RATIO\">IDEAL CURRENT RATIO<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/current-ratio-formula\/#FACTORS_TO_BE_CONSIDERED_WHILE_USING_CURRENT_RATIO\" title=\"FACTORS TO BE CONSIDERED WHILE USING CURRENT RATIO\">FACTORS TO BE CONSIDERED WHILE USING CURRENT RATIO<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/current-ratio-formula\/#OBJECTIVE_AND_SIGNIFICANCE_OF_CURRENT_RATIO\" title=\"OBJECTIVE AND SIGNIFICANCE OF CURRENT RATIO\">OBJECTIVE AND SIGNIFICANCE OF CURRENT RATIO<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/commerceiets.com\/current-ratio-formula\/#LIMITATIONS_OF_CURRENT_RATIO\" title=\"LIMITATIONS OF CURRENT RATIO\">LIMITATIONS OF CURRENT RATIO<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"CURRENT_RATIO_FORMULA\"><\/span><strong>CURRENT RATIO FORMULA<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h1>\n\n\n\n<p>Current ratio explains the relationship between current assets and current liabilities. This ratio is also known as working capital ratio. This <a rel=\"noreferrer noopener\" aria-label=\"ratio (opens in a new tab)\" href=\"https:\/\/commerceiets.com\/ratios\/\" target=\"_blank\">ratio<\/a> is a measure of general liquidity and is most likely to make the analysis of the short term financial position or liquidity position of the firm. It is calculated by dividing the current assets with the current liabilities. The Current Ratio formula is:<\/p>\n\n\n\n<p class=\"has-pale-cyan-blue-background-color has-background\"><strong>CURRENT RATIO= Current Assets\/ Current Liabilities<\/strong><\/p>\n\n\n\n<p><strong>EXAMPLE: <\/strong>Suppose the current assets of a concern as Rs. 2,50,000 and current liabilities of the concern are Rs. 1,00,000. The current ratio will be calculated as follows:<\/p>\n\n\n\n<p>Current ratio= Current Assets\/ Current Liabilities<\/p>\n\n\n\n<p>Current ratio= 2,50,000\/1,00,000<\/p>\n\n\n\n<p>Current Ratio= 2.5:1.<\/p>\n\n\n\n<p><strong>CURRENT ASSETS<\/strong><\/p>\n\n\n\n<p>Current assets are the assets which are likely to be\nconverted into cash or cash equivalents within 12 months from the date of\nbalance sheet or within the period of operating cycle. Current assets include\nthe following assets:<\/p>\n\n\n\n<ul><li>Current investments<\/li><li>Stock or inventories<\/li><li>Trade receivables i.e. debtors and bills\nreceivables.<\/li><li>Short term loans and advances<\/li><li>Cash in hand<\/li><li>Cash at bank<\/li><li>Prepaid expenses<\/li><li>Accrued incomes, etc.<\/li><\/ul>\n\n\n\n<p><strong>CURRENT LIABILITIES<\/strong><\/p>\n\n\n\n<p>Current liabilities are the liabilities payable within 12\nmonths from the date of balance sheet or within the period of operating cycle. Current\nliabilities includes the following liabilities:<\/p>\n\n\n\n<ul><li>Short term borrowings<\/li><li>Trade payables i.e. creditors and bills payable<\/li><li>Short term provisions<\/li><li>Outstanding expenses<\/li><li>Incomes received in advance, etc.<\/li><\/ul>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"_INTERPRETATION_OF_THE_RATIO\"><\/span>&nbsp;INTERPRETATION OF THE\nRATIO<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A relatively high current ratio is an indication that the\nfirm is liquid and has the ability to pay its current obligations in time as\nand when they become due. The high current ratio may not be favorable due to the\nfollowing reasons:<\/p>\n\n\n\n<ul><li>There may be slow moving stocks. The stocks will\nbe pile up due to poor sale.<\/li><li>The figures of debtors may go up because debt\ncollection is not satisfactory.<\/li><li>The cash or bank balances may be lying idle\nbecause of insufficient investments opportunities.<\/li><\/ul>\n\n\n\n<p>A relatively low current ratio represents that the liquidity\nposition of the firm is not good and the firm shall not be very able to pay its\ncurrent liabilities in time without facing difficulties. A low current ratio\nmay be not favorable due to the following reasons:<\/p>\n\n\n\n<ul><li>There may not be sufficient funds to pay off\nliabilities.<\/li><li>There business may be trading beyond its\ncapacity. The resources may not warrant the activities.<\/li><\/ul>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"IDEAL_CURRENT_RATIO\"><\/span>IDEAL CURRENT RATIO<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The ideal current ratio is considered in the ratio of 2:1\ni.e. current assets double the current liabilities is considered to be\nsatisfactory. The idea of having double the current assets as compared to\ncurrent liabilities is to provide for delays and losses in the realization of\ncurrent assets.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"FACTORS_TO_BE_CONSIDERED_WHILE_USING_CURRENT_RATIO\"><\/span>FACTORS TO BE CONSIDERED WHILE USING CURRENT RATIO<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A number of factors should be taken into consideration\nbefore reaching the conclusion about short-term financial position. Some of\nthese factors are as follows:<\/p>\n\n\n\n<p><strong>TYPE OF BUSINESS: <\/strong>Current ratio is influenced by the type of business. A business with heavy investments in fixed assets may be successful even if the ratio is low. On the other hand, a trading concern will require a high current ratio because it has to pay its suppliers quickly.<\/p>\n\n\n\n<p><strong>TYPES OF PRODUCTS: <\/strong>The type of products in which a business deals also influences current ratio. A business dealing in goods whose demand changes fast will require a higher current ratio. On the other hand, if products have more intrinsic value such as gold, silver, metals etc. a lower current ratio may also do.<\/p>\n\n\n\n<p><strong>REPUTATION OF THE CONCERN: <\/strong>A business unit with better goodwill and reputation may afford a small current ratio because the turnover is more and creditors also allow credit for longer periods. A new concern or a concern which has not established its reputation will need higher current assets to pay current liabilities in time.<\/p>\n\n\n\n<p><strong>SEASONAL INFLUENCE: <\/strong>Current assets and current liabilities change with the seasons. In a peak season, current assets will be more and current ratio will be high. On the other hand this ratio will go down when the season is off.<\/p>\n\n\n\n<p><strong>TYPE OF ASSETS AVAILABLE:<\/strong> This type of current assets in the business also influences interpretation of current ratio. If the current assets include large amounts of slow moving stocks then even a high ratio may not be satisfactory.<\/p>\n\n\n\n<p>All the above mentioned factors should be taken into mind\nwhile interpreting current ratio.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"OBJECTIVE_AND_SIGNIFICANCE_OF_CURRENT_RATIO\"><\/span>OBJECTIVE AND SIGNIFICANCE OF CURRENT RATIO<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Current ratio is a general and quick measure of liquidity of\na firm. It represents the \u2018margin of safety\u2019 or \u2018cushion\u2019 available to the\ncreditors and other current liabilities. It is most widely used for making\nshort-term analysis of the financial position or short-term solvency of the\nfirm.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"LIMITATIONS_OF_CURRENT_RATIO\"><\/span>LIMITATIONS OF CURRENT RATIO<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The following are the limitations of the current ratio are\nas follows:<\/p>\n\n\n\n<p><strong>CRUDE RATIO:<\/strong> It is a crude ratio because it measures only the quantity and not the quality of current assets.<\/p>\n\n\n\n<p><strong>WINDOW DRESSING:<\/strong> The valuation of current assets and window dressing is another problem if current ratio. Current assets and liabilities are manipulated in such a way that current ratio loses its significance. Window dressing may be indulged in the following ways:<\/p>\n\n\n\n<ul><li>Over valuation of a closing stock.<\/li><li>Obsolete or worthless stocks are shown in the\nclosing inventory at their costs instead of writing them off.<\/li><li>Recording in advance cash receipts applicable to\nthe next year\u2019s sales.<\/li><li>Omission of a liability for merchandise included\nin inventory.<\/li><li>Treating a short-term obligation as a long-term\nliability.<\/li><li>Inadequate provision for bad and doubtful debts.<\/li><li>Inclusion in debtors advance payment for\npurchase of fixed assets.<\/li><\/ul>\n\n\n\n<p>Window dressing is done to show current ratio at a particular figure. It does not present the real financial position of the concern. The inferences drawn on such a will be faulty and deceptive.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noreferrer noopener\">CONNECT ON LINKEDIN<\/a><\/div>\n<\/div>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting\/\"><strong>Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/non-profit-organisation\/\"><strong>Non profit organisation<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/depreciation\/\"><strong>Depreciation<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/liquidity-ratios-types\/\"><strong>Liquidity ratios<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/nature-of-accounting\/\"><strong>Nature of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/receipt-and-payment-account-pdf\/\"><strong>Receipts and Payments Account<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/depreciation-accounting\/\"><strong>Depreciation Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/acid-test-ratio-formula\/\"><strong>Acid Test Ratio<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/benefits-of-accounting\/\"><strong>Benefits of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-accounting\/\"><strong>Scope of accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/hire-purchase-accounting-notes-pdf\/\"><strong>Hire Purchase Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cash-ratio\/\"><strong>Cash Ratio<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/difference-between-cost-accounting-and-financial-accounting\/\"><strong>Difference between cost accounting and financial accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-financial-accounting-management-accounting-and-cost-accounting\/\"><strong>Financial accounting, cost accounting and management accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-hire-purchase-and-instalment\/\"><strong>Difference between hire purchase and instalment system<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/financial-ratio-analysis\/\"><strong>Financial ratio analysis<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/difference-between-transaction-and-event\/\"><strong>Difference between transaction and event<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/transactions\/\"><strong>Transactions<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/users-of-accounting\/\"><strong>Users of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/current-ratio-formula\/\"><strong>Ratio analysis<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/limitations-of-accounting-2\/\"><strong>Limitation of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/capital-expenditure\/\"><strong>Capital Expenditure<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/instalment-system\/\"><strong>Instalment System<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-consignment-and-sale\/\"><strong>Difference between consignment and sale<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/book-keeping\/\"><strong>Book Keeping<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/revenue-expenditure\/\"><strong>Revenue Expenditure<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/reserves-accounting\/\"><strong>Reserves Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-normal-and-abnormal-loss\/\"><strong>Abnormal loss vs normal loss in consignment<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accountancy\/\"><strong>Accountancy<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-capital-expenditure-and-revenue-expenditure\/\"><strong>Difference between capital and revenue expenditure<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/reserves-accounting\/\"><strong>Provisions&nbsp;<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/treatment-of-loss-on-consignment\/\"><strong>Treatment of loss on consignment<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting-is-an-art-or-science\/\"><strong>Accounting as science or an art<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-equation\/\"><strong>Accounting Equation<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/single-entry-system-in-accounting\/\"><strong>Single entry system<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-treatment-of-consignment\/\"><strong>Accounting treatment of consignment<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting-is-an-art-or-science\/\"><strong>Book Keeping vs accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/deferred-revenue-expenditure\/\"><strong>Deferred Revenue Expenditure<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/statement-of-affairs-and-balance-sheet-difference\/\"><strong>Difference between statement of affairs and balance sheet<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-joint-venture-and-consignment\/\"><strong>Joint venture vs consignment<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting-is-an-art-or-science\/\"><strong>Book keeping vs accountancy<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/capital-receipt\/\"><strong>Capital receipt<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/ifrs\/\"><strong>IFRS<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/departmental-accounting\/\"><strong>Departmental Accounting<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting-is-an-art-or-science\/\"><strong>Accounting vs accountancy<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/revenue-receipt\/\"><strong>Revenue receipt<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/balance-sheet\/\"><strong>Balance Sheet<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/methods-of-departmental-accounting\/\"><strong>Methods of departmental accounting<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/basis-of-accounting\/\"><strong>Basis of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-capital-and-revenue-receipt\/\"><strong>Difference between capital and revenue receipt<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/profit-and-loss-account\/\"><strong>Profit and loss Account<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/allocation-of-expenses-in-departmental-accounting\/\"><strong>Allocation of expenses in departmental accounting<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/branches-of-accounting\/\"><strong>Branches of accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-accounting-concepts-and-conventions\/\"><strong>Difference between accounting concepts and conventions<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/trading-account\/\"><strong>Trading Account<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/inter-departmental-transfers\/\"><strong>Inter-departmental transfers<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/cash-and-mercantile-system-of-accounting\/\"><strong>Cash and mercantile system of accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-standards\/\"><strong>Accounting Standards<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/voyage-account\/\"><strong>Voyage Account<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/different-types-of-branches\/\"><strong>Different types of branches<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting-principles\/\"><strong>Accounting Principles<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/objectives-of-accounting\/\"><strong>Objectives of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-for-incomplete-voyage\/\"><strong>Accounting for Incomplete Voyage<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-departmental-and-branch-accounting\/\"><strong>Departmental vs Branch accounting<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/golden-rules-of-accounting\/\"><strong>Golden ru\nles of accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/process-of-accounting\/\"><strong>Process of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/joint-venture\/\"><strong>Joint venture<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/methods-of-branch-accounting\/\"><strong>Methods of branch accounting<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/double-entry-system-of-accounting\/\"><strong>Double entry system of book keeping<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-accounting\/\"><strong>Scope of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-joint-venture-and-partnership\/\"><strong>Joint Venture Vs Partnership<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/incorporation-of-branch-trial-balance\/\"><strong>Incorporation of branch trial balance<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/difference-between-double-single-entry-system\/\"><strong>Double entry vs Single entry system<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-accounting-concepts-and-conventions\/\"><strong>Accounting Concepts vs Accounting conventions<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/methods-of-recording-transactions-in-joint-venture\/\"><strong>Methods of recording transactions in Joint Venture<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/garner-vs-murray-rule\/\"><strong>Garner VS Murray Rule<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/history-of-accounting-pdf\/\"><strong>History of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-provisions-and-reserves\/\"><strong>Difference between provisions and reserves<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/consignment\/\"><strong>Consignment<\/strong><\/a><\/td><td><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>CURRENT RATIO FORMULA Current ratio explains the relationship between current assets and current liabilities. This ratio is also known as working capital ratio. This ratio is a measure of general liquidity and is most likely to make the analysis of the short term financial position or liquidity position of the firm. It is calculated by&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/current-ratio-formula\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;CURRENT RATIO FORMULA&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":3164,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,11],"tags":[],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3163"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=3163"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3163\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/3164"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=3163"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=3163"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=3163"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}