Current ratio

Short-term assets relative to short-term obligations.

In simple terms: Whether the company has enough short-term money to cover bills due within a year. Above 1 means it does.

Why should I care?

A company that can't pay its near-term bills may have to borrow or raise money on bad terms.

Calculated from reported figures

How it's calculated

Current assets ÷ Current liabilities

In general, a higher value is considered favourable — but always compare within the same industry, because what counts as “normal” varies widely.

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