current ratio

Popular Terms
Indicator of a firm's ability to meet short-term financial obligations, it is the ratio of current assets to current liabilities. Though every industry has its range of acceptable current-ratios, a ratio of 2:1 is considered desirable in most sectors. Since inventory is included in current assets, acid test ratio is a more suitable measure where salability of inventory is questionable. Formula: Current assets รท Current liabilities.

Use 'current ratio' in a Sentence

I was reviewing the company's financial statements and ratios and noticed the current ratio seemed high so I naturally opened the company's balance sheet.
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In order to figure out the problem, Kevin had to figure out the current ratio between the amount of items and the amount of items sold.
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When trying to decide how much to sell your product for you can try and use the current ratio to dictate supply and demand.
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