Forums › ACCA Forums › ACCA PM Performance Management Forums › How to calculate current ratio on calculator?
- This topic has 3 replies, 2 voices, and was last updated 7 years ago by mrjonbain.
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- October 26, 2017 at 5:45 pm #413325
Hi All,
Does anyone know how to get this ratio 1.93:1 on calculator?
The figures are current asset 108000
Current liabilities 56000
It is 1.93:1 but what formula do i need to use to get this on calculator?
ThanksOctober 26, 2017 at 7:41 pm #413331Not sure if this is the answer you want but I would just divide 108000 by 56000.If you round to two decimal places this should give you 1.93.Since you are comparing current assets with current liabilities your second figure will be one.
October 26, 2017 at 8:52 pm #413339HI Mrjonbain
Thank u for your replay.
I think i didnt state the q clearly.
I know where 1.93 is from but i dont know where 1 is from?Thank u
October 27, 2017 at 10:22 am #413388Basically, when you use a ratio in general terms you are comparing the amount of one thing with the amount of another thing.For example,if a fruit bowl has eight apples and two oranges inside it then the ratio of apples to oranges could be described as being 8:2.In other words eight to two.Since these numbers can also be divided by two this ratio can also be expressed as 4:1.In other words four apples to oranges.The same process applies with accounting ratios in pure form.Thus if a company has 8000 in current assets and 4000 in current liabilities it has current ratio of current assets to current liabilities of 2:1.This is because 8000/4000=2.Same applies to your example.Hope this helps.If you need additional explanation please ask.
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