The current ratio is calculated by dividing a company’s current assets by its current liabilities. Ratios of 1 or higher indicate short-term solvency.

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Current liabilities include short-term financial obligations due within a year. Investors should monitor companies' current ratios to assess financial strength. A current ratio above 1 indicates a ...

How well can current assets cover current liabilities? Reviewed by Amy Drury The acid-test ratio (ATR), also commonly known as the quick ratio, measures the liquidity of a company by calculating how ...