Evaluates a company’s ability to meet short-term obligations with its short-term assets. Calculated by dividing current assets by current liabilities, this ratio helps gauge liquidity and short-term financial health.
Example: A company has $200,000 in current assets and $150,000 in current liabilities. The current ratio would be $200,000 / $150,000 = 1.33.
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Gauge a Business’ Financial Vibes
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