Current Ratio is a very important measure of a loan company’s ability to protect its customers from financial mistakes and unexpected events. The current ratio is based on an average of monthly payments made by the customer and the amount of the loan. If the total amount of the loan is more than the current payment for the loan is considered an unsecured loan. A secured loan is one that is based on collateral such as a home or a car. The secured loan often comes with a lower interest rate.
In terms of credit cards, the current ratio for a debt management plan is calculated by dividing the outstanding balance of the account by the total monthly payment. It is important to note that the percentage that the current balance will be used is the actual amount of money being paid back by the customer. When calculating the ratio a consideration needs to be given to the fact that most companies are not able to provide a specific amount that will be used as the current. They can however be able to offer guidance as to how this number will change over time. Most of the loans will use a certain percentage for default management each month. This percentage can be reduced to help reduce the amount of risk for the company.
The factor that may impact the current ratio is the type of customer that has been paying the loan off. Customers who have had bankruptcy or serious financial difficulties in the past should be excluded from calculations. These types of customers can increase the amount of risk and interest they will pay for the loan. On the other hand, new customers are easier to count since they do not have the same financial history as some of the previous customers.