Current Ratio = 1.25 Now that you know the current ratio, you can use it as part of your analysis of the company. The following section explains exactly how to use the current ratio in your analysis.

Current ratio example Let's take a look at a real-life example of how to calculate the current ratio based on the balance sheet figures of Amazon for the fiscal year ending 2019.

Current ratio formula The current ratio is calculated by dividing the value of a company’s tangible assets by the value of its liabilities. Tangible assets can be converted into a monetary value – ...

For example, in some industries, like technology, companies may maintain lower Current Ratios as their assets are less liquid but still maintain financial health.

Liquidity ratios are important financial metrics used to assess a company's ability to pay current debt obligations. The two most common liquidity ratios are the current ratio and the quick ratio.

Current Ratio Example: Apple (NASDAQ: AAPL) Returning to the example above, let’s take a look at how Apple’s current ratio (as of March 27th, 2021) compared to its quick ratio of 0.83.

However, a metric like the current ratio can help us. On the same balance sheet, we can see that Disney has $30.174 billion in current assets, including about $11.5 billion in cash and $13.1 ...

Ratios like the acid test and current ratio help determine a firm's liquidity. Solvency, although related, refers to a company's ability to instead meet its long-term debts and other such obligations.

What does the current ratio show? The current ratio shows a company’s ability to pay off debt. It can have a significant impact on how traders and investors see a company, which means the ratio can ...