The Current Asset Ratio Formula is an important metric used in corporate finance. It helps businesses determine the level of liquidity available to them by comparing current assets to current liabilities. Calculating the current asset ratio is simple – simply divide your current assets by your current liabilities. Doing so will give you a number that indicates how much cash and other liquid assets your business has on hand to cover any short-term debts or expenses. A higher ratio typically indicates better financial health, whereas a lower ratio could indicate issues with liquidity. Knowing your current asset ratio is essential for maintaining financial stability and sound decision making within your business.