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Current Ratio Calculator

Calculate your business's current ratio to assess short-term liquidity and financial health.

Enter your current assets and liabilities — we’ll extract numbers from any format (e.g., $120K, 80k, 1.2 million).

Cash, accounts receivable, inventory, prepaid expenses — all convertible within a year.
Accounts payable, short-term loans, accrued expenses, taxes due within 12 months.

Why the Current Ratio Matters

The Current Ratio is a key liquidity metric that measures a company’s ability to pay its short-term obligations using its short-term assets. It’s one of the most widely used indicators of financial health by lenders, investors, and managers.

How to Use This Calculator

  • Current Assets: All assets expected to be converted to cash within one year.
  • Current Liabilities: Debts due within one year.
  • Enter values freely — we extract numbers from any format (e.g., $120K, 80k, 1.2 million).
  • Click “Calculate” to get your current ratio and liquidity assessment.

Formula Used

Current Ratio = Current Assets ÷ Current Liabilities

Example: $120,000 in assets, $80,000 in liabilities →
Current Ratio = 120,000 / 80,000 = 1.5
This means you have $1.50 in assets for every $1.00 of liabilities.

Interpreting the Results

Current RatioInterpretation
less than 1.0❌ Insufficient assets to cover debts — high risk of default
1.0 – 1.2⚠️ Minimum acceptable — tight liquidity
1.2 – 2.0✅ Healthy — good balance of liquidity and efficiency
greater than 2.0⚠️ Excess assets — may indicate underutilized capital

Real-World Applications

  • Small Businesses: Ensure you can cover payroll, rent, and suppliers
  • Startups: Monitor financial runway and investor confidence
  • Lenders: Assess creditworthiness before approving loans
  • Investors: Compare liquidity across companies
  • Management: Track financial performance over time

Tips to Improve Your Current Ratio

  • ✅ Collect receivables faster — offer discounts for early payment
  • ✅ Reduce inventory levels — avoid overstocking
  • ✅ Refinance short-term debt into long-term loans
  • ✅ Delay non-essential purchases to preserve cash
  • ✅ Use a line of credit strategically to smooth cash flow

Related Metrics

The Current Ratio is part of a family of liquidity ratios:

  • Quick Ratio (Acid-Test): Excludes inventory — stricter test
  • Cash Ratio: Only cash and marketable securities
  • Working Capital: Current Assets − Current Liabilities

Use these together for a complete picture of short-term financial strength.

Industry Benchmarks

  • Retail: 1.4 – 2.0
  • Manufacturing: 1.3 – 1.8
  • Technology (SaaS): 2.0 – 3.0+
  • Restaurants: 1.0 – 1.5
  • Construction: 1.5 – 2.5

Always compare your ratio to industry peers for meaningful insights.

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