Free Current Ratio Calculator
Calculate the current ratio to measure a company's ability to pay short-term obligations with its current assets.
Current Ratio
2.00
Current Ratio vs Total Current Assets
How to Calculate the Current Ratio
Formula
Current Ratio = Current Assets / Current Liabilities
The current ratio gauges whether a business holds enough short-term assets to cover its short-term debts. A ratio above 1.0 means the company can meet its obligations; below 1.0 signals potential liquidity trouble. Most analysts consider a ratio between 1.5 and 3.0 healthy, though the ideal value depends on industry norms.
Example Calculation
A company reports $500,000 in current assets and $250,000 in current liabilities.
- 01Current Ratio = $500,000 / $250,000 = 2.0
- 02Working Capital = $500,000 - $250,000 = $250,000
- 03A ratio of 2.0 means the company has $2 in current assets for every $1 of current liabilities.
Frequently Asked Questions
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