The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It is calculated by dividing current assets by current liabilities.
The current ratio is a good indicator of a company's short-term financial health. A ratio of 1.0 or greater is generally considered good. A ratio below 1.0 indicates that the company may have difficulty meeting its short-term obligations.
The current ratio is calculated as follows:
Current Assets / Current Liabilities