Optimal Value of Current Ratio
The result's identifiers
Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216275%3A25410%2F20%3A39916138" target="_blank" >RIV/00216275:25410/20:39916138 - isvavai.cz</a>
Result on the web
<a href="https://digilib.uhk.cz/bitstream/handle/20.500.12603/228/Honkov%c3%a1%2c%20Kub%c4%9bnka.pdf?sequence=1&isAllowed=y" target="_blank" >https://digilib.uhk.cz/bitstream/handle/20.500.12603/228/Honkov%c3%a1%2c%20Kub%c4%9bnka.pdf?sequence=1&isAllowed=y</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.36689/uhk/hed/2020-01-027" target="_blank" >10.36689/uhk/hed/2020-01-027</a>
Alternative languages
Result language
angličtina
Original language name
Optimal Value of Current Ratio
Original language description
This article deals with the optimal value of current ratio. The paper originated in response to two contradictory statements. The first one states that working capital should be positive, i.e. that current assets are higher than current liabilities. The second statement states that current assets should be paid from short-term sources and fixed assets from long-term sources. This would mean that current assets should be equal to current liabilities. The dependence of current ratio on business success expressed by indicators of profitability - return on assets (ROA) and return on equity (ROE) - was measured on a sample of over four thousand Czech companies. It has been found that for companies with inventory, the ROE rises up to the value of current ratio of 2.5, although the growth rate decreases with increasing liquidity, which means that it is more advantageous for them to have positive working capital, where the amount of assets exceeds the current liabilities 2.5 times. The dependences regarding the ROA and for companies with no inventory cannot be generalized according to the conducted research.
Czech name
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Czech description
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Classification
Type
D - Article in proceedings
CEP classification
—
OECD FORD branch
50206 - Finance
Result continuities
Project
—
Continuities
I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace
Others
Publication year
2020
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů
Data specific for result type
Article name in the collection
Hradec Economic Days. Vol. 10. Part 1
ISBN
978-80-7435-776-3
ISSN
2464-6059
e-ISSN
2464-6067
Number of pages
6
Pages from-to
244-249
Publisher name
Univerzita Hradec Králové
Place of publication
Hradec Králové
Event location
Hradec Králové
Event date
Apr 2, 2020
Type of event by nationality
WRD - Celosvětová akce
UT code for WoS article
000568108700026