What is the 'Current Ratio'?

The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.

Sharper Insight. Smarter Investing. Manage Preferences TERM OF THE DAY Current Ratio The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations. To gauge this ability, the current ratio considers the current total assets of a company (both liquid and illiquid) relative to that company's current total liabilities. Breaking it Down: The current ratio is mainly used to give an idea of a company's ability to pay back its... Read More Related to "Current Ratio" Analyze Investments Quickly With Ratios Make informed decisions about your investments with these easy equations. Read More Dynamic Current Ratio: What It Is And How To Use It Learn why this ratio may be a good alternative to the current, cash and quick ratios. Read More Financial Analysis: Solvency vs. Liquidity Ratios Solvency and liquidity are equally important for a company's financial health. Read More Related Definitions Liquidity Liquidity is the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price. Read More Key Ratio A mathematical ratio that illustrates and summarizes the current financial condition of a company. Key ratios can be used to easily obtain an idea of a company's financial status. Read More Combined Ratio Combined ratio is a measure of profitability used by insurance companies to indicate how well it is performing in its daily operations. Read More Efficiency Ratio Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Read More You are currently subscribed as: mondemand.forex@blogger.com Unsubscribe  |  Manage Subscriptions Investopedia, LLC, A Division of IAC. 114 West 41st St, floor 8, New York NY 10036 Copyright © 2018, Investopedia, LLC. All Rights Reserved Follow Us: