Current Ratio
Whether near-term assets cover near-term bills
Definition
Current ratio is current assets divided by current liabilities. It is a simple liquidity check: can the company pay what it owes in the next year from cash, receivables, and inventory?
Current Assets ÷ Current Liabilities
Example
A current ratio of 1.0 means current assets roughly equal current liabilities. Below 1.0 is common for cash-rich tech firms that run negative working capital on purpose.
Typical range
1.0 to 2.0 is a textbook range; context from the business model matters more