The current ratio is a financial metric used by accountants and finance professionals to understand a companys financial health at any given moment. It is a liquidity ratio that measures a companys ability to pay off its short-term debts and obligations using its current assets. The current ratio is calculated by dividing a companys current assets by its current liabilities. Current assets are resources that can be converted into cash within a year or less, while current liabilities are obligations expected to be paid within one year. A current ratio of 1.0 or higher is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1.0 may indicate that a company has liquidity problems and may not be able to pay off its short-term debts without taking on more debt or needing a cash infusion from shareholders or investors. The current ratio is an important tool for business owners, accountants, investors, creditors, and suppliers to assess a companys financial viability and make informed decisions.