# Current Ratio (CR) formula

Navigasi - The Current Ratio formula is basically part of one of the most commonly used ratios to measure a company's liquidity or ability to meet short-term obligations without facing difficulties. The greater the current ratio, the higher the company's ability to meet its short-term obligations, including the obligation to pay cash dividends payable.

Current Ratio = Current Activities : Current Liabilities × 100% |

Judging from the understanding, the current ratio according to Kasmir (2012:134) is "a ratio to measure the company's ability to pay short-term obligations or debts that are due immediately when billed as a whole". In other words, how much current assets are available to cover liabilities. short-term or soon-to-maturity debt.

Meanwhile, according to Sutrsino (2012: 247) what is meant by the Current Ratio is "information about the ability of current assets to cover current liabilities. Current assets include cash, accounts receivable, securities, inventories, and other assets. While current liabilities include accounts payable, debt notes, bank loans, salaries payable, and other debts that must be paid immediately.

The greater the ratio of current assets to current liabilities, the higher the company's ability to cover its short-term liabilities. If the current ratio is 1:1 or 100%, it means that current assets can cover all current liabilities. So, it is said to be healthy if the ratio is above 1 or above 100%. This means that current assets must be far above the amount of current debt (Harahap, 2010: 301).

Based on this explanation, it can be seen that the elements that affect the value of the current ratio are current assets and short-term debt.

In this case, current assets consist of cash and also securities, including acknowledgments of debt, notes, shares, bonds, credit securities, or any derivatives of securities or other interests or obligations of the issuer, the form commonly traded in money market and capital market. On the other hand, short-term debt can be in the form of debt to third parties (banks or other creditors).

The current ratio measures the ability of current assets to pay current liabilities. Current assets usually consist of cash, marketable securities, receivables, and inventories. Current liabilities consist of trade payables, short-term notes payable, long-term payables that are due soon, accrued taxes and other accrued expenses (mainly wages).

The formula for calculating the current ratio or Current Ratio is as follows:

### Current Ratio = Current Activities : Current Liabilities × 100%

Judging from the formula, it can be understood that the Current Ratio (CR) formula can be easily applied by anyone.

#### Example:

If in the company's financial statements it is known that:

Current Assets in Dollars. 3000

Current Debt in Dollars. 7000

Then the way to calculate it is, 3,000 times (x) 100 divided by (/) 7000, then the result is = 42.86. So the CR of the company in question is "42.86"