Definition: Current Ratio is a model for measuring the liquidity of a company. It can be calculated by dividing all current assets by all current liabilities.
The CR is an indicator of a company's ability to pay its short-term obligations.
This ratio is also known as the working capital ratio or real ratio and is the standard measurement of a business' financial health.
It will tell us whether a company is able to pay its current obligations by measuring if it has enough assets to cover its liabilities.
Another way to determine the liquidity of a company is the Quick Ratio.
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