Current Ratio Calculator: Assess Your Company’s Liquidity Quickly
Type your current assets and liabilities, press Calculate, and the tool divides the two figures to reveal your current ratio. A reading above 1.5 signals enough liquid resources to cover short-term debts for most U.S. firms (Investopedia, 2023).
Current Ratio Calculator
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How to use the tool
Step 1 – Enter Current Assets: Key in everything convertible to cash within 12 months. Samples: 2 300 000 or 725 000.
Step 2 – Enter Current Liabilities: Add all obligations due inside a year. Samples: 1 100 000 or 910 000.
Step 3 – Press “Calculate”: The tool applies the formula below and returns a ratio with plain-language guidance.
Example A: Assets = 2 750 000; Liabilities = 1 100 000 ⇒ Ratio = 2 .50. Strong liquidity.
Example B: Assets = 950 000; Liabilities = 1 250 000 ⇒ Ratio = 0 .76. Potential cash-flow strain.
Quick-Facts
Healthy range for mature U.S. companies: 1.5-3.0 (Investopedia, 2023).
Average S&P 500 current ratio in 2023: ≈1.3 (CSI Market, 2023).
Formula first appeared in Alexander Wall’s credit manuals, 1919 (Wall, 1919).
IFRS defines current assets as those realizable within twelve months (IAS 1, IFRS.org).
“Excess working capital can hide underperformance.” – Deloitte Working Capital Report 2022 (Deloitte, 2022).
FAQ
What is the current ratio?
The current ratio compares your short-term assets to short-term debts, revealing whether cash and near-cash items can meet upcoming obligations (Investopedia, 2023).
How does the calculator work?
You supply asset and liability figures; the script divides assets by liabilities to two decimals and displays contextual advice using preset thresholds.
What is a good current ratio?
Analysts value readings between 1.5 and 3.0. Below 1 signals liquidity risk, while above 3 could expose idle capital (CFI, 2023).
What does a ratio below 1 mean?
Liabilities exceed liquid resources, so the firm may need short-term financing or tighter cash control to avoid missed payments (Moody’s, 2022).
How can I improve my ratio?
Accelerate receivables, trim excess inventory, renegotiate supplier terms, or refinance short-term debt into longer maturities (PwC, 2023).
Is inventory always included?
Yes for current ratio, but the quick ratio excludes inventory to test liquidity under faster liquidation scenarios (SEC Investor Pub, 2021).
How does current ratio differ from quick ratio?
The quick ratio removes inventory and prepaid items, offering a stricter solvency gauge when inventories move slowly (Nasdaq Glossary, 2023).
Why compare against industry averages?
Sector norms adjust for inventory cycles and credit terms; benchmarking highlights operational efficiency gaps specific to your market (KPMG Insights, 2022).
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