Current Ratio

1. Assets that can be converted into cash within one year are called current assets. An asset that takes more than a year is called a Long-term asset
2. Liabilities (debts) that must be paid within a year are called current liabilities. Debts that remain in maturity for more than a year and can be paid back more than a year are called Long-term liabilities.
=> Current ratio = Current assets/Current Liabilities.
Normally, liquidity is considered risky if the current ratio is less than 100%