Current Ratio
Short definition
The current ratio is current assets divided by current liabilities. It is a stock liquidity cut; it does not show intra-period cash peaks or how long inventory takes to become cash.
Detailed explanation
Above 1.0x means current assets cover current liabilities on the book; how fast stock and receivables actually convert is a separate question. Window dressing (a period-end draw or build) inflates the ratio.
The acid test (ex inventory) is a tighter stock cut. Neither replaces the 13-week budget. There is no universal “1.5x is safe” rule; sector CCC and the payment calendar set it.
Why it matters for the CFO
Some credit files and textbooks still use this ratio; the CFO runs liquidity off cash, drawable lines and the maturity calendar. The current ratio can be green while headroom is red.
How it is calculated
Cari oran = Dönen varlıklar / Kısa vadeli yükümlülükler
Variables in the formula
- Current ratio: Current assets / current liabilities
How to read it
A high current ratio can be bloated inventory and AR — overtrading. A low ratio is normal in prepaid models. Thresholds move with sector and season.
Numerical example
Current assets 250 mn TL, current liabilities 160 mn TL → current ratio = 250 / 160 = 1.56x.
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Definitions are educational. They are not investment, credit or tax advice.