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How Is the Current Ratio Calculated? How Is It Used

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How is the current ratio calculated? How is it used to evaluate a company?


Definitions:

Profit Margin

A financial metric indicating the percentage of revenue that exceeds a company's costs, commonly used to assess profitability.

Projected Addition

An estimate or forecast of the future increase in a specific metric such as revenue, profits, or assets.

External Financing

Funding obtained from outside of a company, rather than from its own earnings, to support its operations or growth. This can come from debt, equity, or other financial instruments.

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