The current ratio, calculated by dividing current assets by current liabilities, measures a company's ability to meet 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. This ratio is essential for creditors and investors to assess the short$-$term financial health of a company. It provides insights into the company$$s ability to pay off its debts as they come due and indicates the efficiency of its working capital management.