Glossary
Technical Foundations
Current Ratio
The current ratio is derived by dividing a company’s current assets (cf.) by its current liabilities (cf.). A ratio greater than one generally implies that a company has sufficient liquidity to pay off its short-term obligations. A company with a current ratio of less than 1 is a sign that it risks not having sufficient liquidity available to pay off its short-term obligations, although specific circumstances may dictate otherwise.