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MARKETS / GLOSSARY / CURRENT RATIO

Current ratio

The current ratio is whether what a company can turn into cash within a year covers what it owes within a year. Above 1.0 it covers; below 1.0 it does not, on paper.

Definition

How it is computed here

Formulacurrent assets ÷ current liabilities
UnitMultiple (×)
PeriodOne fiscal year, as reported
SourceExtracted from SEC filings; every value on an asset page carries the accounting tag and the filing it came from
Identifierliquidez_corrente
The inputs

What goes into the formula

Current assetsCash, customers who have not paid yet, inventory, prepaid expenses — everything the balance sheet expects to become cash within twelve months.
Current liabilitiesSuppliers, wages, tax, the portion of debt maturing within twelve months — everything due inside the same window.

A formula without its inputs explained is decoration. Where an input is missing from a filing, the metric is left empty here rather than completed with a zero or an estimate.

Worked example

How to calculate current ratio, step by step

A manufacturer and a supermarket.

Manufacturer — current assets$2,400M
Manufacturer — current liabilities$1,200M
Supermarket — current assets$3,000M
Supermarket — current liabilities$4,000M
  1. Manufacturer: 2,400 ÷ 1,200 = 2.00×.
  2. Supermarket: 3,000 ÷ 4,000 = 0.75×.

Result: 2.00× against 0.75×

The supermarket is below one and is not in trouble. Its customers pay in cash at the till today and its suppliers are paid in sixty days, so money arrives before the bills fall due. The manufacturer sells on ninety-day terms and needs the cushion.

The figures in this example are illustrative and rounded — they are not a real company. The real figures on this site are the live ones below and on every asset page, each carrying the filing it came from.

Why it matters

What current ratio is good for

The current ratio is the fastest read on whether a company can pay next year's bills with next year's assets, without refinancing anything. Watched over several years for one company, a falling ratio is one of the earliest visible signs of strain.

The limit

What this number does not tell you

The ratio treats all current assets as equally liquid, which inventory is not — unsold stock is a current asset right up to the moment it is written off. Retailers and banks routinely operate below one by design, because their cash arrives faster than their bills. And a very high ratio is not automatically good: it can mean cash sitting idle or a warehouse full of goods nobody wants. Below one is normal for whole industries. Of the 5,121 companies here with a current ratio for their most recent year, 1,418 — more than a quarter — sit below one. Retailers that collect from customers before paying suppliers, and banks whose deposits are current liabilities by construction, both operate there by design. A ratio under one is a question worth asking, not an answer.

Every metric on this site is published with its blind spot stated. A figure without its limit is half a fact.

In the data

Highest reported current ratio

From the most recent fiscal year of each company.

On a real company

See it in a published filing

Their sectors

These pages show the figure across up to nineteen fiscal years, with the accounting tag and the filing behind every value.

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