Glossary
Current Ratio
The current ratio measures short-term liquidity by dividing current assets by current liabilities. A result above one means the business holds more assets it can convert to cash within a year than obligations falling due in that same window. It is a quick read on whether a company can cover its near-term bills, and it moves in step with working capital. Lenders often set a minimum current ratio as a loan covenant, so owners track it through regular reporting.
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