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current ratio

   Also found in: Dictionary/thesaurus, Wikipedia, Hutchinson 0.04 sec.
Current ratio
Indicator of short-term debt-paying ability. Determined by dividing current assets by current liabilities. The higher the ratio, the more liquid the company.
current ratio
A measure of a firm's ability to meet its short-term obligations. The current ratio is calculated by dividing current assets by current liabilities. Both variables are shown on the balance sheet. A relatively high current ratio compared with those of other firms in the same business indicates high liquidity and generally conservative management, although it may tend to result in reduced profitability. See also cash ratio, quick ratio.


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The hospital industry reacted favorably to the news that the current ratio will hold for three more years.
TOUGHER NURSE-PATIENT RATIOS DELAYED UNTIL 2008 by Daily News (Los Angeles, CA)
The current ratio is one nurse to 347 patients, but chief nursing officer Sarah Mullally says the recommendation was based on a 1970's USA study and 'it is not clear how applicable that is to the NHS today'.
No more infection control by Australian Nursing Journal
A typical bank revolving loan covenant, for example, may set out the following requirements: a minimum amount of shareholders' equity, a maximum debt-to-equity ratio, and/or a minimum current ratio.
Balance sheet becomes breeding ground for fraud by Lundelius, Charles R., Jr. / Journal of Accountancy
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