# How to calculate current ratio on balance sheet

Dec 20, 2019 · Current ratio = current assets / current liabilities. The greater the ratio, the easier it is for the business to pay off current liabilities. However, if the current ratio is too high, then the company might not be efficiently using its resources. So where is the happy balance? After you find the current ratio of the business, compare it to its competitors and to companies that are fundamentally alike. May 25, 2011 · The Current Ratio specifically measures the extent to which current farm assets would pay a business’ or farms’ current liabilities (loans, accounts payable, etc.…) through the sales of its current assets. To determine the Current Ratio you divide the Total Current Assets by the Total Current Liabilities. Here are three financial ratios that are based solely on current asset and current liability amounts appearing on a company's balance sheet: Four financial ratios relate balance sheet amounts for Accounts Receivable and Inventory to income statement amounts. Cash ratio is calculated by dividing absolute liquid assets by current liabilities: Cash ratio = Cash and cash equivalents / Current Liabilities Both variables are shown on the balance sheet (statement of financial position). Norms and Limits. Cash ratio is not as popular in financial analysis as current or quick ratios, its usefulness is limited. Aug 14, 2015 · Non-current assets: On Travis Perkins’s balance sheet, these are dominated by goodwill. This is a reflection of the fact that the company has grown over the years by acquiring other builders ...