Accounting
Intermediate
Current Ratio
A liquidity measure of whether a firm can cover its short-term obligations with short-term assets.
Formula
Variables
CRCurrent ratio
Current AssetsCash, receivables, inventory
Current LiabilitiesDue within a year
Example
Assets $150k / liabilities $75k = 2.0
Did You Know?
A ratio near 1.5–3 is generally healthy; far above may signal idle cash, far below a cash crunch.