Current Ratio
A measure of a business's ability to cover short-term obligations, calculated by dividing current assets by current liabilities.
A current ratio above 1.0 generally means a business has more short-term assets than short-term debts due within a year, which lenders read as a sign the business can meet its near-term obligations without straining cash flow.
It’s a quick, standard snapshot pulled from a balance sheet during underwriting, though it doesn’t account for how quickly those current assets can actually be converted to cash, which is where the quick ratio adds more detail.
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