The current ratio is a liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets.
 | | Term of the Day | Words to Know | | |  | | Current Ratio | | The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. It tells investors and analysts how a company can maximize the current assets on its balance sheet to satisfy its current debt and other payables. | | Read More » | | Related to "Current Ratio" | | | | Current Assets | | Current assets are a balance sheet item that represents the value of all assets that can reasonably be expected to be converted into cash within one year. | | Read More » | | | Working Capital | | Working capital, also known as net working capital (NWC), is a measure of a company's liquidity, operational efficiency and short-term financial health. | | Read More » | | | Accounts Receivable | | Accounts receivable is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. | | Read More » | | | Liquidity Ratio | | Liquidity ratios are a class of financial metrics used to determine a debtor's ability to pay off current debt obligations without raising external capital. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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