Current ratio: 

What is Current Ratio ? 

As it has been anticipated, the liquidity ratios has the goal to identify a company's ability to satisfy maturing short-term debts which are accounted in the current liabilities. It is crucial to understand the meaning of the current ratio by keeping in mind that too much liquidity is not good because excessive cash balance means that the company has a lower rate of returns.  

The current ratio, is a liquidity ratio that measures in percentage terms the company's ability to pay short term debts (current liabilities including accruals) from resources available in the short term (current assets including accruals and accrued income). 

🔎How to use the Curren Ratio ? 

The current ratio, can be used as a warning indicator and as a seafty margin for short-term creditors of the company.

Indeed it is a measure that makes sense for creditors in fact it is stilla relevant KPI for creditworthiness used by International reating Agencies like JP Morgan and Moody's among the others in the financial industry. 

🔎 The Current Ratio in Altman Credit Risk metrics 

✨ Example Insight Sentence with Asset-to-Sales:

“Although the current and quick ratios suggest adequate liquidity, the rising asset-to-sales ratio highlights that the company is becoming more asset-intensive, which could constrain its flexibility in meeting short-term obligations if receivables and inventory are not turned over efficiently.”

 🔎The Current Ratio fundamentals of Accounts