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What Is the Current Ratio?
Formula
The current ratio measures a company's ability to pay short-term obligations due within one year.
A ratio above 1.0 means the company has more current assets than liabilities, indicating good liquidity.
Common use cases:
- Assessing company liquidity
- Credit analysis
- Financial health checks
Frequently Asked Questions
Sarah Chen
Financial Analyst, CFA
Sarah is a Chartered Financial Analyst with over 8 years of experience in investment management and financial modeling. She specializes in retirement planning and compound interest calculations.
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