Current ratio is known as liquidity ratio and running capital ratio, shows the proportion of current assets of a business in relation to its current liabilities. Current ratio is also known as equal to current assets divided by current liabilities. If current liabilities exceed current assets, then the company may have problems meeting its short-term requirements.
Business ratios can be explained as financial tools that can help you in finding the weak and erroneous areas of your business. With the help of these ratios you can find out the numerical and financial relationship among different entities of your business. Some
Over-trading and under-trading are facets of over and under-capitalization. Over trading is a curse to the business. Over Trading : A company which is under-capitalized will try to do too much with the limited amount of capital which it has. For example it may