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“Current Ratio = Current Assets / Current Liabilities As you put hypothetical numbers into this equation, you’ll quickly see that a 1.0 means the company won’t owe or earn capital. As the number becomes larger, it becomes evident that the company has an easier time paying its liabilities and won’t need to issue more debt. When I’m analyzing a business, I’ll never consider a business that has a current ratio below a 1.0.”

Preston Pysh, Warren Buffett's Three Favorite Books
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Warren Buffett's Three Favorite Books Warren Buffett's Three Favorite Books by Preston Pysh
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