What is Current Ratio?
Current Ratio A liquidity ratio calculated as current assets divided by current liabilities, indicating a company’s short-term solvency position.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Current Ratio” Used in Practice?
A current ratio above 1.0 indicates that current assets exceed current liabilities, suggesting sufficient liquidity for short-term obligations.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Current Ratio?
A liquidity ratio calculated as current assets divided by current liabilities, indicating a company’s short-term solvency position.
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