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Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

The current ratio is calculated by dividing a company’s current assets by its current liabilities. Ratios of 1 or higher indicate short-term solvency.

Understand what the current ratio measures, why it matters, and how to use it to assess and improve short-term liquidity. There’s no universal safe or danger level. Ideal current ratios vary by ...