Topics
Series
Concept
Name
Current ratio
en-NZ
Label
Current ratio
en-NZ
Description
Total current assets divided by total current liabilities.
The current ratio represents the ratio of current assets to current liabilities and gives an indication of a business’s ability to pay its short-term liabilities. A ratio less than 1 indicates that current liabilities are greater than current assets and that the business may struggle to pay its short-term liabilities. A ratio higher than 1 means a business should be able to pay its short-term liabilities. The ability to meet current liabilities in the short-term is often dependent on how liquid the current assets are.
en-NZ