The current ratio is calculated by dividing a company’s current assets by its current liabilities. Ratios of 1 or higher indicate short-term solvency.

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These are examples of assets not normally easily disposed of. Key Takeaway: Formally, if an asset isn't expected to be cashable within a year, it isn’t considered a current asset. In business, a ...

Current liabilities include short-term financial obligations due within a year. Investors should monitor companies' current ratios to assess financial strength. A current ratio above 1 indicates a ...