03A. Liquidity KPIs: Current Ratio

Episode 3 is split into four parts; each segment will be discussing a different Liquidity KPI. You'll learn about how that metric impacts your client's business and what it can do for your advisory services. The equation for the Current Ratio is relatively simple; (Current Assets / Current Liabilities). But what this means is that if the current liabilities exceed the current assets, the company will have a problem meeting short term obligations This KPI is important to monitor because it’s a simple means of determining the strength of the company and their ability to pay short term debts. It’s an excellent way to help your clients what their finances look like today and where they’re moving towards in the future.