Current Ratio
Liquidity measure comparing current assets to current liabilities.
Formula
Current Assets ÷ Current Liabilities
Real World
In 2023, Marks & Spencer reported a current ratio below 1, suggesting short-term obligations exceeded liquid assets — though for large retailers this is often manageable due to predictable cash inflows.
Exam Focus
Never just quote the ratio — always interpret it in context; an 'ideal' ratio varies significantly by industry.
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