Current ratio

Current assets are what turns into cash within a year: cash itself, money owed by customers, stock waiting to be sold. Current liabilities are what falls due in the same window. The ratio between them is the simplest test of whether a company can meet its near-term obligations without raising money.

Below 1.0 means it cannot, on paper. That is normal for businesses paid before they pay their own suppliers — supermarkets and restaurants live there comfortably — and a warning almost everywhere else.

Current assets of $700m against current liabilities of $450m.

1. 1700 / 450 = 1.56.

Every example in this glossary describes the same imaginary company, so the figures join up as you move between metrics.

• Between roughly 1.5 and 3 is unremarkable for most industries. Much higher can mean cash sitting idle rather than strength.
• Look at what the current assets are made of. Stock that is not selling and invoices that are not being paid both count here and neither is cash.
• A falling ratio over several years matters more than the level in any one.

• It treats slow-moving stock as though it were cash, which is why the cash ratio and the quick ratio exist.
• It is a snapshot at the year end, and plenty of companies choose a year end when the balance sheet looks its best.
• Banks and insurers do not classify assets as current at all, so the ratio simply does not exist for them.

Computed as a liquidity ratio in the Financials tab and used in the scorecard's Financial health category, where it carries 15%. Where a filer reports no current assets or liabilities — which is every bank — the metric drops out and the category reweights the metrics that remain, rather than scoring the absence as though it were a perfect result.

The full methodology covers where the figures come from, how the statements are normalised, and what is deliberately left unadjusted.