[salmanqureshi24]

@johnmoffat said:
They are both moving by the same amount, but not by the same proportion!

Suppose at the moment current assets are 150 and current liabilities are 100 (so a current ratio of 1.5)
Suppose the then buy more inventory for 50.

Current assets become 200, and current liabilities become 150. The current ratio is now 200/150 = 1.33 🙂

this s great answer.

Andrew if you wanna learn more about Financial Ratio Analysis you can contact me.

[Author]

Posts