The current ratio, calculated as current assets divided by current liabilities, measures a company's ability to cover its short$-$term obligations with its short$-$term assets. A ratio above $1$ indicates that the company has more current assets than current liabilities, suggesting good liquidity. However, an excessively high ratio may indicate inefficient use of assets. The current ratio is widely used by creditors and investors to assess the short$-$term financial health and operational efficiency of a company, influencing lending and investment decisions.