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Financial Ratio
Ratio
7
Business
12th Grade
07/06/2017
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Term
Current Ratio Formula
 Definition
Current Assets/Current Liabilities
Term
Altering Current Ratio
 Definition
-Selling under-Used fixed assets
-Raising more share capital
-Increasing long-term borrowing
-Postponing planning investing
Term
Ideal Current Ratio
 Definition
1.5 to 2
Term
Low Current Ratio
 Definition
Below 1 is low
Term
Gearing Formula
 Definition
Non-Current
Liabilities/Capital Employed * 100
Term
Raising Gearing
 Definition
-Buy back ordinary shares
-Issue more preference shares
-Issue more debentures
-Obtain more loans
Term
Reducing Gearing
 Definition
-Issue more ordinary shares
-Retain more profits
-Repay loans
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