Current ratio is a popular way for investors to assess the health of a stock’s balance sheet. Current ratio is a measure of a company’s ability to pay its current liabilities and obligations due within one year.
Mathematically, current ratio is a company’s current assets divided by its current liabilities. In practical terms, it’s a quick way for investors to gauge a company’s liquidity.
Why Is It Important?
Investors can compare a stock’s current ratio to other companies within its industry. Stocks with a higher current ratio will have an easier time paying near-term liabilities.
A company with a current ratio well below its industry average may have a higher risk of default in the near-term and require some additional digging into the balance sheet.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="However, if a company has a current ratio that is too high, it could be a sign that the company is not utilizing its assets as efficiently as it could be.” data-reactid=”23″>However, if a company has a current ratio that is too high, it could be a sign that the company is not utilizing its assets as efficiently as it could be.
High Current Ratio Stocks
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Here are 15 stocks with relatively heavy volume (over 500,000 shares daily) and a high current ratio (over 3), according to Finviz:” data-reactid=”25″>Here are 15 stocks with relatively heavy volume (over 500,000 shares daily) and a high current ratio (over 3), according to Finviz:
- Pinterest Inc (NYSE: PINS), 13.7 ratio.
- Shopify Inc (NYSE: SHOP), 11.2 ratio.
- Twilio Inc (NYSE: TWLO), 9.6 ratio.
- Beyond Meat Inc (NASDAQ: BYND), 9.0 ratio.
- Twitter Inc (NYSE: TWTR), 8.7 ratio.
- NVIDIA Corporation (NASDAQ: NVDA), 8.6 ratio.
- Crispr Therapeutics AG (NASDAQ: CRSP), 8.3 ratio.
- Snap Inc (NYSE: SNAP), 7.3 ratio.
- Xilinx, Inc. (NASDAQ: XLNX), 6.4 ratio.
- Etsy Inc (NASDAQ: ETSY), 6.1 ratio.
- Skyworks Solutions Inc (NASDAQ: SWKS), 5.6 ratio.
- Facebook, Inc. (NASDAQ: FB), 4.7 ratio.
- Lumentum Holdings Inc (NASDAQ: LITE), 4.5 ratio.
- Tiffany & Co. (NYSE: TIF), 4.2 ratio.
- Indian Energy Exchange Ltd (NYSE: IEX), 3.2 ratio.
Benzinga’s Take
Current ratio can give a quick glimpse at the health of a company’s balance sheet, but its only one measure of a company’s health. To get a full picture of a business, smart investors incorporate all available information and dozens of financial metrics into their analysis of a stock.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Do you agree with this take? Email [email protected] with your thoughts.” data-reactid=”44″>Do you agree with this take? Email [email protected] with your thoughts.
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