Current RatioAnalyzing Firms
The current ratio is one of the quickest ways to determine if a company has liquidity. Lower current ratios increase the chance a company will not be able to clear its current liabilities. This will result in bankruptcy unless preventative measures are taken. The firm will issue shares or borrow money, thus either reduce the value of investments or reduce future earnings with interest costs.
The higher the current ratio, the further distanced it is from short term bankruptcy. A current ratio of one means the firm can pay its current liabilities. This can only occur if it converts to cash or sells all its current assets and the company will have to find new ways to finance its next set of current liabilities. Current ratios should be large enough to allow substantial cushioning for future sets of current liabilities. You should consider firms with a minimum of two, and prefer firms with a current ratio of three and above.
Did we help you? Vote with a Crypto-Donation!
Donate Bitcoin Cash
International Economic Analysis:
- Major Currency Economic Summaries
- Performance of Major Imports and Exports
- Mandates of Central Banks versus Expectations
- Performance Indexes of Major Economies
- Economically Correlated Currency Projections
- Large Funds Currency Sentiment Readings
- List of Technical Indicators to Look For
- Occasional: Foregin Exchange Technicals Markups
American Markets Analysis:
- Summaries of American Economic Structure
- Performance of Major
- Federal Reserve Mandate versus Expectations
- Performance Indexes of U.S Economy
- Economically Correlated U.S Dollar Projections
- Large Trading Fund Index Sentiment Readings
- Market Wide Earnings Versus Valuations
- Fundamental Ranking of U.S Business Sectors
- Best and Worst Future Consensus Estimates
- Occasional: Firm Fundamental Strength Report
- List of Technicals to Look for While Trading
Investment and Finance, Serviced by Amazon
No Results Found
The page you requested could not be found. Try refining your search, or use the navigation above to locate the post.