Research On The Standard Reference Value Of Current Ratio Of Listed Companies In Different Industries In China

The current ratio has been is one of the most important indicators to reflect a company's short-term ability to pay its debts.Because of its simpleness in calculation,accessible data and understandability,the current ratio arouses wide concern of company management,the shareholder,creditor and social public.But there is no denying that it is questioned by many experts and scholars because of its own defects.So far,the standard reference value of the current ratio 2 which is widely recognized still has been used.But many foreign researches show that the current ratio gradually has declined,and it is also difficult to maintain the overall average level by 2 of domestic enterprise.Even if the enterprise which's current ratio more than 2 is still in a financial crisis,it shows that the higher is not the better and number 2 is impractical as the industry safety standards.The paper is the research about the problem how much the standard reference of the current ratio is suitable in this backdrop.In the full understanding of the importance of the current ratio for measuring listed companies' short-term ability to pay debt,this paper combined with the main advantages and influencing factors of traditional current ratio and defects of the standard reference value decided to make without amending the concept and formula of the original current rate.The paper carries out some dimension reduction index from a large number of different indicators by the principal component analysis.Then the paper want to find out the related index by correlation inspection,and use the contribution rate to get the comprehensive score as the standard of the top 20%companies in different industry.Based on this,the standard reference value of the current ratio can be obtained.Through the research of distribution rule and trend of change of the current ratio,this paper argues that the standard reference value is not fixed,and the average of 5 years is relative stage reference value.The paper puts forward the process and standard to the standard reference value,and it is important for analysts to calculation and analysis through the different time points of data.This paper is divided into five primary parts:the first and second section describes the research background,method and reviewed the literatures.It's easy to find that most of research focuses on the analysis and amendment of the current ratio on the basis of its effectiveness and the defects of the standard reference value.And there is very little research about reasonable standard reference value of the industry.The third part analyses the problems of current index and take question to current reference value on the basis of the importance of the current ratio.By using the data of 2006?2010 year to validate and summary,it's obvious to find that the average number of both industry in all and industry in classification is much more deviated from 2 and the rate of companies which's value is greater than 2 has increased but still less than 40%.The fourth part is the core of this article,the selection of the listed company sample is the first step.The standard to select the representative corporations in different industry is not uniqueness and reliable.So the paper want to find out the related index by correlation inspection,and use the contribution rate to get the comprehensive score as the standard of the top 20%companies in different industry.Then make analysis about the reason of value in special typical industry.The fifth part focuses on the summarizing of process and results,and putting forward to the insufficiency and future prospect.The main contributions of this paper include:1,the article want to prove the problems of the current ratio and its reference value by make use of the data of nearly five years.2,the article researches the condition and tendency of the current ratio during 2006 to 2010.3,factor analysis and correlation test are used in selecting various representatives of different industries.4,the article establishes average standard reference value according to the industry classification,including excellent representative reference value and safe minimum reference value.5,the article makes analysis about the reason in special typical industry.The main limitations include:1,the article have not armended the current ratio according to the availability and intelligibility of data.2,the article ignore some industry which's sample size is lower than 20 because of its particularity.