What is the current ratio?
A liquidity ratio equal to current assets divided by current liabilities.
Current Ratio Calculator
Check short-term liquidity by comparing current assets to current liabilities.
Enter current assets and liabilities
Use balance-sheet totals for current assets and current liabilities.
About this calculator
How to use Current Ratio Calculator, plus the formulas and logic behind the results.
Tool description
The current ratio measures whether short-term assets cover short-term obligations. Higher is generally more liquid, but very high ratios can mean idle cash or inventory.
How to use
- Enter total current assets.
- Enter total current liabilities.
- Select Calculate to view the ratio and net working capital.
- Interpret alongside industry norms and the quick ratio.
Formulas & reference
Current ratio = Current assets ÷ Current liabilitiesNet working capital = Current assets − Current liabilities
Liquidity guide
- Ratio > 1 often means coverage
- Compare within the same industry
- Seasonality can swing the ratio
- Pair with cash flow analysis
Calculation logic
Assets are divided by liabilities. Liabilities must be positive. Working capital is shown as the difference.
Inventory-heavy businesses may look liquid on current ratio but weaker on quick ratio.
Current Ratio Calculator FAQ
Common questions about the calculation and how to interpret the estimate.
What is a healthy current ratio?
It depends on the industry; many aim near or above 1, but context matters.
What are current assets?
Cash, receivables, inventory, and other assets expected to convert within a year.
What are current liabilities?
Obligations due within a year, such as payables and short-term debt.
How is this different from the quick ratio?
Quick ratio excludes inventory and other less-liquid current assets.
Can the ratio be below 1?
Yes—that signals current liabilities exceed current assets.