For example, a company’s current ratio may appear to be good, when in fact it has fallen over time, indicating a deteriorating financial condition.

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.

To calculate the current ratio, you divide the current assets by current liabilities. So the current ratio for Amazon will be 1.1, meaning the company has at least enough assets to pay off its ...

To calculate a company’s quick ratio, divide the value of its most liquid assets (i.e., those that can be converted to cash in under three months) by the value of its current liabilities (i.e ...

Current Ratio Formula CR = Current Assets / Current Liabilities Current Ratio Example: Apple (NASDAQ: AAPL) Let’s calculate Apple’s current ratio as of March 27th, 2021. To calculate the ...

Example of Calculating the Current Ratio in Excel Let's say that a small business owner wants to expand and needs to determine his ability to take on more debt.