The current ratio can be referred to as the ratio of efficiency and liquidity by which the ability of the firm to pay off liabilities (short-term) with their current assets is measured. The current ratio is vital liquidity measure due to the fact that liabilities that are short-term are due in the next year. This indicates that limited time amount is held by a company for the funds to be raised in order for these liabilities to be paid off. Current assets such as marketable securities, cash equivalents, and cash can be converted in the short-term in an easy manner to cash. This indicates that current liabilities can be paid off more easily by companies holding current assets in larger amounts when they turn out to be due in absence of needing to sell off assets generating revenue, long-term assets etc.