Current Ratio Calculator
Calculate the current ratio to measure a company's ability to pay short-term obligations with short-term assets.
Results
What is it?
The current ratio is a liquidity ratio that measures a company's ability to pay its short-term debts (due within one year) using its short-term assets. It is one of the most common financial health metrics used by creditors and investors.
How to use
Enter total current assets and total current liabilities from the balance sheet. A ratio above 1.0 means the company has more short-term assets than liabilities.
Example scenario
Current assets $750,000 and current liabilities $500,000: current ratio = 1.5x. The company has $1.50 in current assets for every $1.00 of current liabilities.
Pro tip
A healthy current ratio is generally 1.5-2.5x. Below 1.0 signals potential liquidity problems. Above 3.0 may indicate idle assets not being productively deployed. Industry norms vary significantly: retailers often operate below 1.0 using negative working capital efficiently.