The current ratio compares current assets to current liabilities — a standard short-term liquidity metric for lenders, creditors, and internal treasury review. Pair it with working capital and cash flow analysis for complete context.
How to use this calculator
- Enter total current assets from the balance sheet.
- Enter total current liabilities for the same date.
- Review the current ratio and working capital.
- Read the liquidity assessment and recommendations.
- Compare to industry norms and your historical trend.
Formula
Current ratio = Current assets ÷ Current liabilities. Working capital = Current assets − Current liabilities. A ratio below 1.0 may signal liquidity stress; very high ratios may indicate under-deployed assets.
Example
Current assets of $450,000 and current liabilities of $200,000 produce a current ratio of 2.25 and working capital of $250,000 — strong liquidity for general planning.
Frequently asked questions
What current ratio is considered healthy?
Many analysts view 1.5–2.5 as adequate for industrial businesses, but capital-light software firms may run lower while retailers operate leaner ratios by design.
How is this different from the quick ratio?
The quick ratio excludes inventory and other less liquid current assets. A future quick ratio calculator will complement this tool.