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Finance Formulas / July 13, 2018 / Aniyah Booth

The balance sheet is a complex display of this equation, showing that the total assets of a company are equal to the total of liabilities and shareholder equity, or said differently, all uses of capital (assets) are equal to all sources capital (debt: liabilities and equity: shareholders' equity).

The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations. To gauge this ability, the current ratio considers the current total assets of a company (both liquid and illiquid) relative to that company’s current total liabilities.

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