The current ratio is a measure of a contractor's ability to pay its current liabilities with its current assets. The formula for calculating the current ratio is current assets divided by current liabilities. If a contractor has a low current ratio, it can lead to credit difficulties; however, a high current ratio may indicate inefficient use of working capital if it means that cash is sitting in a bank earning low interest rather than being invested at a better rate.
iscover the top construction industry organizations to join in 2025. From AGC and ABC to NAHB and CFMA, this guide breaks down the benefits of each group, helping contractors, subcontractors, and professionals grow their network, stay informed, and gain industry support.
Read MoreDiscover the top 10 accounting practices every homebuilder needs for profitability and growth, from stable Charts of Accounts to automated AP processes. RedHammer provides expert guidance and customized solutions to streamline your financial operations and enhance profitability.
Read MoreRedHammer helps homebuilders stabilize their financial operations, implement accurate job costing, streamline subcontractor and billing processes, and integrate financial and project management systems to improve visibility, reduce risk, and drive long-term growth.
Read MoreThe construction industry faces a persistent labor shortage in early 2025, with an estimated 439,000 additional workers needed. Contractors struggle to find skilled labor, leading to rising wages, project delays, and cost increases. Workforce development and immigration policies will be key to addressing this challenge.
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