Current Ratio

Current assets divided by current liabilities — measures short-term liquidity.

What Is Current Ratio?

The current ratio tells you whether a company can pay its bills due within the next year. A ratio above 1.0 means the company has more current assets than current liabilities. It's a quick snapshot of financial health.

Formula

Current Ratio = Current Assets / Current Liabilities

Why It Matters

A current ratio below 1.0 is a red flag — the company may struggle to meet short-term obligations. Above 2.0 generally indicates strong liquidity. However, a very high ratio might mean the company isn't deploying its assets efficiently.

Typical Ranges: 1.5-3.0 is generally healthy. Below 1.0 is concerning. Above 4.0 may indicate idle capital.

Real Examples from Our Database

CDLRCadeler A/S

0.0DVR 9.3

SOFISoFi Technologies Inc

0.0DVR 9.2

TEMTempus AI Inc

3.1DVR 9.2

ATATAtour Lifestyle Holdings Ltd

1.8DVR 9.2

QXOQXO Inc

3.6DVR 9.1

Based on the latest data in our system. Values may change.

Related Terms

Debt-to-Equity Ratio (D/E)

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