Current Ratio Calculator
Calculate your company's Current Ratio in seconds with MoneyHub's trusted calculator
Updated 5 November 2024
Updated 5 November 2024
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
How to use this calculator
Your latest balance sheet has the numbers you need to calculate your company's current ratio. Locate the numbers for 'total current assets' and 'total current liabilities'.
1Enter your TOTAL current assets
2Enter your TOTAL current liabilities
3Press "CALCULATE"
3Your Current Ratio is displayed
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.