**Current Ratio, Ratio Analysis, Liquidity Ratio**

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**Current Ratio**

The **Current Ratio** is the most widely used **liquidity ratio**. It measures how comfortably a business can pay short-term liabilities with short-term assets; that is, pay its current liabilities from current assets.

The **Current Ratio** is important because if you can't pay your short-term liabilities you are out of business; and generally you can only pay your debts with your current assets as they are the more liquid assets

This **ratio analysis** technique is also general indicator of the safety of the business. A high **Current Ratio** generally means a more secure business, as for most businesses it's a pretty straightforward indicator into how easily (or safely) a business can continue through paying all it's debts.

The **Current Ratio** of say, 2.82, simply represents the number of times over your current assets can be used to pay out your current liabilities. So a result of 2.82 simply means your current assets can be used 2.82 times over to pay current liabilities.

*Current Ratio Calculator*

**The calculator asks for:**

*Current Assets*, which are found on the balance sheet.

*Current Liabilities*, which are also found on the balance sheet.

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Current Ratio, Ratio Analysis, Liquidity Ratio