Current Ratio

Current ratio = Current Assets / Current Liabilities. Liquidity benchmark.

Inputs

Result

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How to use this calculator

  • From balance sheet: current assets / current liabilities.
  • Compare to industry peers + history.

About this calculator

Current ratio measures short-term liquidity: can the company pay obligations due within 12 months? Above 2.0 is strong; 1.5-2.0 healthy; 1.0-1.5 adequate; below 1.0 risk of cash crunch. Industry varies — retailers run 1.0-1.5 normally (fast inventory turn); manufacturers 1.5-2.5. Current ratio includes inventory; quick ratio excludes (more conservative).

Frequently asked

How current is "current"?+
Within 12 months. Includes cash, AR, inventory, prepaid expenses (assets); AP, short-term debt, current portion long-term debt (liabilities).
Industry differences?+
Retail/grocery: 1.0-1.5 normal. Tech/SaaS: 2-4 (cash-rich). Utility: 1.0-1.5 (heavy AR/inventory). Banks: not used.
Too high?+
>3 may indicate inefficient capital allocation — sitting on cash that could be invested or returned to shareholders.
Includes inventory?+
Yes. Quick ratio (acid test) excludes inventory + prepaid for stricter liquidity test.
Trend matters?+
Falling current ratio quarter over quarter is warning sign. Stable or rising = healthy.

Related calculators

Quick Ratio (Acid Test)
(Current assets − Inventory) / Current liabilities. Stricter than current ratio.
Debt-to-Equity Ratio
D/E = Total Debt / Total Equity. Leverage relative to ownership.
Return on Equity (ROE)
ROE = Net Income / Avg Shareholders' Equity. Profitability per dollar of equity.
Return on Assets (ROA)
ROA = Net Income / Avg Total Assets. Profitability per dollar of all assets.
EBITDA Calculator
EBITDA = Net Income + Interest + Tax + D&A. Operating earnings before financing + non-cash items.
Free Cash Flow (FCF)
FCF = EBIT(1−T) + D&A − CapEx − ΔNWC. Cash available to all capital providers.

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