A liquidity ratio that measures a company's ability to pay short-term obligations, calculated by dividing current assets by current liabilities. A ratio above 1.0 indicates the company has more current assets than current debts.
From Latin 'currens' (running, flowing) referring to assets and liabilities that 'flow' or change within a year. The term became standard in accounting during the 1920s as businesses needed better tools to assess short-term financial health.
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