How to calculate current ratio in excel
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· What is current ratio?
According to Wikipedia, the current ratio is a liquidity ratio that measures whether a firm has enough resources to meet its short-term obligations. It compares a firm's current assets to its current liabilities, and is expressed as follows:
Current liabilities: Current liabilities are obligations that will be settled by current assets or by the creation of new current liabilities.Typical current liabilities include accounts payable and accrued expenses.
Let's look at today's example.
Suppose we want to get the current ratio of company A and company B.
1. Click cell B8 where we want to calculate the total current assets of company A. Enter =SUM(B3:B7). This function helps us add up the values of cell B3 to cell B7.
To know more about the Sum Function, click here.
2. Similarly, enter =SUM(C3:C7) in cell C8. Here, we get the total current assets of these two companies.
3. Likewise, to get the total current liabilities, just enter=SUM(B11:B12) in cell B13 and =SUM(C11:C12) in cell C13.
4. Finally, as we all know the formula of the current ratio is: current assets / current liabilities. Enter =B8/B13 in cell B15 and =C8/C13 in cell C15.
We can learn that the current ratio of company A is 1.5 and that of company B is 1.7. A higher current rate suggests a better financial situation for company B.
In today’s free WPS Office tutorial, we have learned a simple yet useful way to calculate current ratio in excel. WPS Spreadsheet is similar to Microsoft Office is avaliable for Windows, PC, Mac, Linux, Android, and iOS devices.
To explore more about WPS Office:
Click here to learn how to use SUM function to quickly calculate the sum.
Here, we have learned how to get the current ratio in WPS Spreadsheet.
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