current liabilities to net worth ratio definition

current liabilities to net worth ratio

Indicates reliance on the equity for payment of debt. It is one of the measures of the solvency of a firm and, as a rule of thumb, should not exceed 60 percent; higher percentages mean significant pressure on future cash flows. Formula: Current liabilities x 100 ÷ Net worth.

current liabilities to net worth ratio is in the Accounting & Auditing and Banking, Commerce & Finance subjects.

current liabilities to net worth ratio appears in the definitions of the following terms: financial ratios and solvency ratios

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