Current Ratio Calculator

How to use the Current Ratio Calculator

1. 1Enter current assets, inventory, current liabilities and cash.
2. 2Pick the units or options from the menus if the current ratio tool offers them.
3. 3Read the current ratio in the large result box.
4. 4Look at the extra rows for related figures.
5. 5Press Copy result to keep the answer.

When you need the current ratio

Lenders, investors and owners use it to judge short-term strength. Students use it in accounting courses.

A ratio above 1 means that short-term assets cover short-term debts. Between 1.5 and 2 is often seen as comfortable, but this depends on the sector, as shops with fast-moving stock can work with less.

How the current ratio is worked out

Current ratio = current assets ÷ current liabilities. Quick ratio = (current assets − inventory) ÷ current liabilities. Cash ratio = cash ÷ current liabilities. Working capital = current assets − current liabilities. With current assets of 500,000, inventory of 150,000 and current liabilities of 250,000, the current ratio is 2, the quick ratio is 1.4 and working capital is 250,000.

Every answer on this page comes from that one rule, so you can check any result by hand with a calculator. The figures shown underneath, such as other units, are conversions of the same answer.

• Three liquidity ratios
• Working capital
• Plain-language note

Mistakes to avoid with current ratio

A very high ratio is not always good, as it may mean idle cash or too much stock. Always compare with firms in the same sector and with the company's own past figures.

On phone and computer

On a phone, type into the boxes one after another and read the current ratio underneath; Copy result puts it on the clipboard for a message or a note. On a computer the inputs sit on the left and the answer on the right, so you can change one figure and watch the current ratio move. The current ratio calculator works the same on both.

Checking your current ratio by hand

A good habit is to test the current ratio calculator with a case you already know. With current assets of 500,000, inventory of 150,000 and current liabilities of 250,000, the current ratio is 2, the quick ratio is 1.4 and working capital is 250,000.

If your own figures give a surprising answer, repeat the working yourself: Current ratio = current assets ÷ current liabilities. Quick ratio = (current assets − inventory) ÷ current liabilities. Cash ratio = cash ÷ current liabilities. Working capital = current assets − current liabilities. Small differences usually come from rounding, from mixing units, or from a typing slip in one of the inputs. Liquidity is one piece of a company's health, so look at it next to others. Check borrowing with the Debt to Equity Calculator, profit on owners' money with the Return on Equity Calculator, and how quickly goods sell with the Inventory Turnover Calculator.

Features

• Compare within the same sector
• High is not always better
• Balance sheet figures are a snapshot
• Clear messages when the current ratio inputs make no sense
• Copy the result with one tap
• Private: nothing is uploaded

Frequently asked questions