Current Ratio Calculator

This is an online current ratio calculator that helps you find the value of the current ratio, which is used to measure the liquidity of a company.

The current ratio is a liquidity ratio used across the industry to assess a company’s short-term obligations or those due within one year. In other words, it reflects a company’s ability to generate enough cash to pay off all its debts once they become due. It’s used globally as a way to measure the overall financial health of a company.

Calculating the current ratio

To calculate the ratio, analysts compare a company’s current assets to its current liabilities.

  • Current assets listed on a company’s balance sheet include cash, accounts receivable, inventory and other assets that are expected to be liquidated or turned into cash in less than one year.
  • Current liabilities include accounts payable, wages, taxes payable, and the current portion of long-term debt.

The formula to calculate the current ratio is as follows:

Current Ratio = Current Liabilities / Current Assets


  • If a company with a current ratio that is lower than the industry average may indicate a higher risk of distress or default.
  • If a company has a very high current ratio compared to their peer group, it indicates that management may not be using their assets efficiently.

Current Ratio Example

Balanced sheet item Company A Company B
Cash and equivalents $10,000 $45,000
Inventory $80,000 $15.000
Accounts receivable $20,000 $50,000
Total current assets $110,000 $110,000
Accounts payable $50,000 $20,000
Short-term notes payable $55,000 $75,000
Wages payable $20,000 $30,000
Total current liabilities $125,000 $125,000
Current ratio .88 .88

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