Accordingly, accounting ratio is defined as the relationship existing between any two accounting variables expressed as number, percentage, or fraction. Note that these accounting variables can be part of any financial document such as a balance sheet or profit and loss statement.
The current ratio. Current Ratio Formula The Current Ratio formula is = Current Assets / Current Liabilities. The current ratio, also known as the working capital ratio, measures the capability of a business to meet its short-term obligations that are due within a year.
Current ratio = current assets/current liabilities read more is used to compare the current assets Current Assets Current assets refer to those short-term assets which can be efficiently utilized for business operations, sold for immediate cash or liquidated within a year.