The current ratio is defined as the ratio of current assets to current liabilities of a firm for a particular period. It represents the number of current assets available to firms for the repayment of current liabilities. Higher the current ratio, the greater is the short-term solvency of the firm and vice versa. However, a very high or low current ratio is a matter of concern. If the current ratio is very high, it implies that the current assets are lying idle whereas a very low current ratio implies that short-term solvency is not good for the organization.