Current Ratio Calculator
Calculate your company's Current Ratio in seconds with MoneyHub's trusted calculator
Updated 5 May 2026
Updated 5 May 2026
Current Ratio in a Nutshell
- The current ratio indicates how effectively a company can meet its current liabilities.
- The formula is simple: Current ratio = Current assets / Current liabilities
- A 1.50 : 1 current ratio, also know as 1.5, means that a company has $1.50 of current assets to cover ever $1 of its current liabilities.
- Conversely, a 0.60 : 1 current ratio means that the company has 60 cents of assets for every $1.00 of current debts due, which means it may be in financial trouble.
Current Ratio Calculator Instructions:
- You'll need your latest set of financials, or you can access the numbers from your online accounting software such as XERO or MYOB.
- Make sure you use the totals, not sub-totals.
Current Ratio Calculator
Measure your business's short-term liquidity by comparing current assets against current liabilities. The current ratio is one of the most-used solvency tests by lenders, accountants, and investors.
Current ratio
2.00
$240,000 ÷ $120,000
Risk
Tight
Healthy
Underused
0
1.0
1.5
3.0
4.0+
Healthy liquidity
A current ratio of 2.00 means you have $2 of current assets for every $1 of current liabilities. This is the standard target for most NZ businesses and signals comfortable short-term solvency. For a more conservative view, use the Quick Ratio Calculator, which excludes inventory.
About this metric: The current ratio measures whether your business can cover short-term debts with short-term assets. It's heavily influenced by inventory levels, so it can look healthy on paper while still leaving the business cash-strapped. The quick ratio (acid test) excludes inventory and is a stricter measure. Both should be looked at together for a complete picture of liquidity.
Using the Quick Ratio alongside the Current Ratio
The current ratio is one of several measures that indicate the financial health of a company, but it's not the single and conclusive one. One must use it along with other liquidity ratios, as no single figure can provide a comprehensive view of a company.
Quick Ratio vs Current Ratio
The current ratio is less conservative than the quick ratio because it includes all current assets, whereas the quick calculator excludes prepaid assets and inventory (which can't be immediately sold to pay debts). The current ratio indicates the immediate ability of a business to meet its debts, whereas the quick ratio offers a more 'acid test' (as it's often known as) by stripping out any asset that's not cash-based.
