Financial Poise

Current Ratio

  • July 1, 2022
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A company’s current ratio is calculated by dividing its current assets by its current liabilities. The mathematical representation of this is Current Ratio = Current Assets / Current Liabilities. Compare to Quick Ratio. A higher current ratio is better than a lower current ratio and, as a rule of thumb, a current ratio of less than 1 is generally a cause for concern See also, Quick Ratio.