This ratio tells you how many times current (within 12 months) assets could cover current liabilities. A value of 1 or better indicates that current liabilities could be covered by current assets.
This calculation subtracts any existing long-term debt related to fixed assets (e.g., vehicle loan, mortgage, leasehold improvement loan, etc.) from the value of fixed assets.
Revenue classification in compliance with generally accepted accounting principles (GAAP) has changed with the implementation of accounting standards updates (ASU’s).
