Corporate Finance Analysis
The current ratio is a liquidity metric that measures a company's ability to pay off its short-term liabilities with its short-term assets. It is calculated by dividing current assets by current liabilities, providing insight into a firm's financial health and efficiency in managing its resources. A higher current ratio indicates better liquidity, which connects to various aspects like the balance sheet's impact on the income statement, efficiency in managing cash and marketable securities, and a deeper understanding of balance sheet components.
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