Current Ratio AnalysisCurrent Ratio is calculated by dividing the Current Assets of a company by its Current Liabilities. It measures whether or not a company has enough cash or liquid assets to pay its current liability over the next fiscal year. The ratio is regarded as a test of liquidity for a company.
Current Ratio Over Time Pattern
About Current RatioTypically, short-term creditors will prefer a high current ratio because it reduces their overall risk. However, investors may prefer a lower current ratio since they are more concerned about growing the business using assets of the company. Acceptable current ratios may vary from one sector to another, but generally accepted benchmark is to have current assets at least as twice as current liabilities (i.e. Current Ration of 2 to 1).Compare to competition
In accordance with recently published financial statements The Home Depot has Current Ratio of 1.13 times. This is much higher than that of the Consumer Cyclical sector, and significantly higher than that of Home Improvement Stores industry, The Current Ratio for all stocks is over 1000% lower than the firm.