The current ratio is calculated by dividing a company's current assets by its current liabilities. Ratios of 1 or higher indicate short-term solvency. Because the current ratio compares short-term ...

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David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning.

A resulting ratio of more than one means that current ... It can represent the short-term financial health of a company. The formula is current assets minus current liabilities.

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The quick ratio compares the value of a company's most liquid assets to the value of its current liabilities so investors can get a sense of how well it can cover its expenses in the short term.