Accounting/finance ratio that is current assets divided by current liabilities.

The current ratio is useful is judging a company's ability to pay its bills. The lower the ratio, the worse it is (meaning the company has alot of current liabilities, such as bank loans to pay, compared to assets that can be used to pay off these debts).

Information used to compute the current ratio can be easily found on a company's balance sheet.

The quick ratio (or acid test ratio) is similar to the current ratio. However, instead of using all current assets in the numerator, it uses MONETARY current assets. Meaning that things like inventory and prepaid expenses aren't included. The quick ratio's a better way to judge exactly how much cash (and things easily convertable to cash) a company has to pay their current bills.

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