💰 Current Ratio Calculator
Calculate current ratio
How to Use This Calculator
Enter Current Assets
Input the total current assets - assets that can be converted to cash within one year, including cash, accounts receivable, inventory, and other short-term assets.
Enter Current Liabilities
Enter the total current liabilities - all short-term obligations due within one year, including accounts payable, short-term debt, and other current liabilities.
Review Current Ratio
See the current ratio - a liquidity ratio that measures ability to pay short-term obligations. A ratio of 2.0 or higher is generally considered healthy, indicating sufficient current assets to cover current liabilities.
Formula
Current Ratio = Current Assets / Current Liabilities
Working Capital = Current Assets - Current Liabilities
Example Calculation:
If current assets $50,000, current liabilities $25,000:
• Current ratio = $50,000 / $25,000 = 2.0
• Working capital = $50,000 - $25,000 = $25,000
• This means current assets are 2x current liabilities
About Current Ratio Calculator
A current ratio calculator helps you calculate the current ratio, which is a liquidity ratio that measures a company's ability to pay short-term obligations. The current ratio is calculated as Current Assets / Current Liabilities. A ratio of 2.0 or higher is generally considered healthy, indicating that the company has sufficient current assets to cover current liabilities. The current ratio is an important metric for assessing liquidity, financial health, and ability to meet short-term obligations.
When to Use This Calculator
- Liquidity Analysis: Assess ability to pay short-term obligations
- Financial Health: Evaluate financial health and liquidity position
- Credit Analysis: Assess creditworthiness and liquidity risk
- Working Capital Management: Evaluate working capital position
Understanding Current Ratio
- Ratio > 2.0: Excellent liquidity (healthy)
- Ratio 1.0-2.0: Moderate liquidity (acceptable)
- Ratio < 1.0: Low liquidity (may indicate risk)
- Industry Standards: Ratios vary by industry
Why Use Our Calculator?
- ✅ Liquidity Analysis: Calculate current ratio accurately
- ✅ Financial Health: Assess liquidity position
- ✅ Credit Analysis: Evaluate creditworthiness
- ✅ Working Capital: Assess working capital position
- ✅ 100% Free: No registration or payment required
Frequently Asked Questions
What is current ratio?
Current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It's calculated as Current Assets / Current Liabilities. A ratio of 2.0 or higher is generally considered healthy, indicating that the company has sufficient current assets to cover current liabilities. Current ratio is an important metric for assessing liquidity, financial health, and ability to meet short-term obligations.
What's a good current ratio?
A ratio of 2.0 or higher is generally considered healthy, indicating sufficient current assets to cover current liabilities. However, the "good" ratio depends on the industry and business model. Some industries naturally have higher or lower ratios. Ratios below 1.0 may indicate liquidity risk, while very high ratios (above 3.0) may indicate inefficient asset management. Compare to industry benchmarks and historical trends.
How is current ratio different from quick ratio?
Current ratio includes all current assets (cash, receivables, inventory), while quick ratio excludes inventory and other less liquid assets. Quick ratio = (Cash + Marketable Securities + Receivables) / Current Liabilities. Quick ratio is more conservative because inventory may not be quickly convertible to cash. Current ratio provides a broader view of liquidity, while quick ratio focuses on immediate liquidity.
Why is current ratio important?
Current ratio is important because it measures ability to pay short-term obligations. It helps: (1) Assess liquidity - ability to meet short-term obligations, (2) Evaluate financial health - liquidity position, (3) Assess creditworthiness - liquidity risk, (4) Working capital management - working capital position. A healthy current ratio indicates that the company can meet its short-term obligations and is less likely to face liquidity problems.