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Current Ratio
Valuation & Fundamentals
Current assets (cash, receivables, inventory and other assets expected to turn into cash within a year) divided by current liabilities.
It shows whether the company can cover the obligations due over the next year with its short-term assets. A ratio above 1 means short-term liabilities are covered, but what counts as comfortable varies by industry.
Example
A company with current assets of $15 billion and current liabilities of $10 billion has a current ratio of 1.5.
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