GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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50% - Moderately

Current Ratio


Synonyms:cash asset ratio, cash ratio, liquidity ratio
Filed Under: financial-banking, investments
Tags: banking, investment
 

Definition of current ratio

current ratio
1. A ratio used to measure a company's liquidity and relative ability to pay for short-term obligations. Also know as "liquidity ratio", "cash asset ratio", and "cash ratio", the current ratio is derived by dividing the company's current assets by its current liabilities.

Related Terms and Acronyms:

  • acid-test ratio   A ratio that determines the liquidity of a company without requiring the company to sell assets or inventory.
  • liquidation   To convert into cash.
  • overall liquidity ratio   A method of determining how easily and quickly a company can sell off assets to pay off its debts.
  • quick liquidity ratio   A metric used to find if a company has enough liquidity to make it's short term financial obligations.

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