Business Insights—Current Ratio

The Current Ratio measure overall liquidity and is an indicator of your business’ ability to pay debt. The top half of the window shows amounts in a table format, the bottom half displays a line graph to represent the comparison. This rate is calculated as follows:

Current Ratio = Current Assets divided by Current Liabilities

For information about how amounts are calculated and defined, see Business Insights—Introduction.

Amounts shown in this window are color coded:

■	Green indicates an increase in the current ratio from the prior period. This ratio shows the ability to pay debts. The appropriate ratio may vary between industries.

■	Red indicates a decrease in the current ratio from the prior period. Injection of equity from the owners, or increased long-term funding might enable the business to remove current debt or purchase more assets.

■	Blue means there has been no change in the current ratio from the prior period.

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Related Topics

■	Tracking financial information

■	Reviewing financial information