The current ratio is a financial ratio that measures if a firm has enough resources to pay its debts over the next 12 months. It is derived by calculating the ratio of current assets to current liabilities. A value of less than 2.0 is usually considered a source of some concern, though the ratio will vary from industry to industry. The current ratio includes inventory, but not all inventory may be liquidated at the same price as the value on the books, so the ratio is often considered together with the liquidity ratio. As with all ratios, the trend is more important than any one value. See also Ratio Analysis and Ratio, Liquidity.« Back to Glossary Index
Discover the world’s largest Glossary of Procurement terms
With over 800 Procurement specific terms (and growing) you will find everything you need to know or thought you knew about the Procurement function. Our aim is to provide you with a comprehensive list collated from the Comprara Groups hub of training and consulting source materials.The Procurement Glossary has been compiled by industry expert Paul Rogers.