Current Ratio
Also called: working capital ratio
The current ratio divides current assets by current liabilities — a rough test of whether a company can cover the next year's obligations. Around 1.5–3 is conventionally comfortable, but the number is only as good as the assets inside it: inventory that won't sell and receivables that won't collect both count as current assets right up until they don't.
Formula
Current ratio = Current assets ÷ Current liabilities
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