Current Ratio refers to liquidity ratio calculated as Current Assets divided by Current Liabilities. It indicates the borrower’s short-term ability to meet operating obligations, but must be read with asset quality and industry cycle. In MSME underwriting, it is read as part of the financial assessment and is usually compared across periods, peers, banking conduct and management explanations. For example, a ratio above the policy threshold may look comfortable, but slow-moving inventory or doubtful receivables can still weaken liquidity. It matters because the number can influence eligibility, limit sizing, repayment comfort, leverage view and early-warning assessment. The common mistake is to use it mechanically; seasonality, accounting treatment, one-off items and data mismatches can change the credit interpretation.