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

​Interpretation

• 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