CURRENT RATIO The most common ratio using current-asset and current-liability data is the current ratio, which is current assets divided by current liabilities. Recall the makeup of current assets and current liabilities. Inventory is converted to receivables through sales, the receivables are collected in cash, and the cash is used to buy inventory and pay current liabilities. A company’s current assets and current liabilities represent the core of its day-to-day operations. The current ratio …showed first 75 words of 1501 total…

…showed last 75 words of 1501 total…ratio measures the percentage of a stock’s market value that is returned annually as dividends, an important concern of stock holders. Preferred stockholders, who invest primarily to receive dividends, pay special attention to this ratio. BOOK VALUE PER SHARE OF COMMON STOCK. Book value per share of common stock is simply common stockholders’ equity divided by the number of shares of common stock outstanding. Common shareholders’ equity equals total stockholders’ equity less preferred equity.