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.
Current ratio = Current assets ÷ Current liabilities
- 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.
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
- 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.
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.