Interactive Current Ratio Calculator

Calculate current ratio instantly with step-by-step explanations and visual charts. Professional tool for financial analysis and business health assessment.

Include cash, accounts receivable, inventory, and other assets convertible within one year
Include accounts payable, short-term debt, and obligations due within one year

Current Ratio Formula

Understanding the calculation and interpretation

Current Ratio Definition

The current ratio is calculated by dividing current assets by current liabilities:

Current Ratio = Current Assets รท Current Liabilities

Interpretation Guide

  • Current Ratio > 1: Company has more current assets than liabilities, suggesting good short-term financial health
  • Current Ratio = 1: Equal current assets and liabilities
  • Current Ratio < 1: More liabilities than assets, may indicate potential liquidity problems

A healthy current ratio is typically between 1.2 and 2.0, indicating sufficient liquid assets to cover short-term obligations.

How to Use the Calculator

Simple steps for accurate financial analysis

1

Enter Current Assets

Input total current assets from your balance sheet (cash, receivables, inventory, etc.)

2

Enter Current Liabilities

Input total current liabilities (payables, short-term debt, accrued expenses)

3

Get Instant Analysis

View your current ratio with professional interpretation and visual charts

Frequently Asked Questions

The current ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations (due within one year) with its short-term assets. It compares current assets to current liabilities.

A healthy current ratio is typically between 1.2 and 2.0. Ratio above 1 indicates more assets than liabilities. Ratio below 1 suggests potential liquidity problems. Ratio above 2 may indicate inefficient asset use.

Current assets include cash, cash equivalents, short-term investments, accounts receivable, inventory, and other assets convertible within one year. Current liabilities include short-term debt, accounts payable, accrued liabilities, and obligations due within one year.

Limitations include: doesn’t consider cash flow timing, can be manipulated near reporting periods, industry standards vary. The quick ratio (excluding inventory) is a more stringent liquidity measure.

The current ratio includes all current assets. The quick ratio (acid-test) excludes inventory, focusing only on assets that can be quickly converted to cash. Quick ratio is a more conservative liquidity measure.

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