Definition

Current ratio

Current assets divided by current liabilities — coverage of the obligations due within a year by the resources expected to convert to cash within a year. A ratio below one means negative working capital, which reads as strain in a slow-moving business and as efficiency in one that collects from customers before paying suppliers.

Formula

Current ratio = Current assets ÷ Current liabilities

Drivers — what actually moves it

Cash conversion cycle: how fast inventory and receivables turn into cash versus how slowly payables come due.
Payment terms: collecting up front and paying suppliers later pushes the ratio below one by design, not distress.
Inventory build: stocking ahead of demand inflates current assets and the ratio without improving liquidity.

Where to find it in the filing

Balance sheet (Consolidated Balance Sheets). 10-K Item 8 — total current assets and total current liabilities, both instants at the same period end.

XBRL concepts Echelon grounds to: AssetsCurrent · LiabilitiesCurrent

Sector caveats — where this breaks

The 'healthy above 1' folk rule inverts for negative-working-capital business models — direction and business context beat the threshold.
Banks present no classified balance sheet — current versus non-current does not apply.

Drill it in a live lesson Working capital Balance-sheet identity

Drill current ratio on another filer

Graded exercises that use this metric — each one against a different company's own filed figures.

AbbVie's working capital: reading the sign Adobe's working capital: reading the sign Autodesk's working capital: reading the sign American Electric Power's working capital: reading the sign American Tower's working capital: reading the sign AutoZone's working capital: reading the sign

Educational use only — not investment advice. Figures come from public SEC filings; Echelon teaches you to analyze data, it never recommends buying or selling any security.