Current assets divided by current liabilities is a key financial ratio that provides an indication of a business’ ability to meet short-term obligations. This ratio shows the proportion of assets that are immediately available to pay off debts, including any expenses due within 12 months. A higher ratio means that a business has more current assets than liabilities, and is thus better positioned to pay its current debts. On the other hand, a lower ratio can indicate that the business may struggle in meeting its short-term debt obligations. Therefore, it is important for businesses to carefully monitor their current assets divided by current liabilities ratio.