Definition
Current ratio measures a company�s ability to pay short-term obligations by dividing current assets by current liabilities.
Related Services
Financial reporting, liquidity management, and credit risk analysis services help companies maintain a healthy current ratio.
Problem and Application
A low current ratio may indicate liquidity issues, while an excessively high ratio may suggest inefficient asset use. Businesses must optimize their balance sheets.
Conclusion
Monitoring the current ratio helps businesses maintain financial stability and prepare for short-term obligations.
