Current assets ratio
factor.formula
Current assets ratio:
in:
- :
Represents the total amount of current assets at the end of the most recent reporting period. Current assets refer to assets that can be converted into cash or consumed within one year or a normal operating cycle, including cash, short-term investments, accounts receivable, prepaid expenses, inventory, etc.
- :
Represents the total assets of the business at the end of the most recent reporting period. Total assets include current assets and non-current assets and are a summary of all the economic resources owned by the business.
factor.explanation
The current asset ratio reflects the proportion of a company's short-term liquid assets in total assets, and is an important indicator for measuring a company's short-term debt-paying ability and asset liquidity. A higher current asset ratio usually means that the company has a stronger debt-paying ability in the short term and can convert assets into cash more quickly to meet operating needs. However, an excessively high current asset ratio may also mean that the company has failed to effectively use its assets for long-term investment and may lose potential profit opportunities. Therefore, the reasonable level of this indicator should be comprehensively analyzed in combination with industry characteristics, corporate development stage and macroeconomic environment. Special attention should be paid to the composition and proportion of each sub-item in current assets, such as the turnover of accounts receivable, the structure and liquidity of inventory, etc., in order to identify potential financial risks and operational efficiency issues.