Current liabilities to net worth ratio

Current liabilities to net worth ratio,

Definition of Current liabilities to net worth ratio:

  1. 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.

Meaning of Current liabilities to net worth ratio & Current liabilities to net worth ratio Definition