Final answer:
The formula for the current ratio is Current Assets divided by Current Liabilities. It measures a company's liquidity and ability to cover short-term obligations with short-term assets.
Step-by-step explanation:
The current ratio formula is: Current Assets / Current Liabilities
The current ratio is used to assess a company's ability to cover its short-term obligations with its short-term assets. It measures the liquidity of a company and indicates whether it has enough assets to cover its liabilities in the near future.
A ratio above 1 indicates that a company has more current assets than current liabilities, while a ratio below 1 suggests potential liquidity issues.