Current Ratio Calculator
The current ratio checks whether a business has enough assets that turn into cash within a year to cover the bills due within a year. It is a quick look at short-term cash strength.
- Free
- Works offline after your first visit
- Saves on this device
- No sign-up
- Updated
How it works
Divide current assets by current liabilities. A ratio above 1 means the assets are larger than the bills due soon. The quick ratio takes inventory out of the assets first, since stock is often slow to turn into cash.
Worked example
With $85,000.00 of current assets and $50,000.00 of bills due within a year, the current ratio is 1.7. Without the stock, the quick ratio is 1.3.
Questions
Is a ratio of 1 always enough?
Not always. It is a rough floor, and it helps to know how fast your bills come due and how quickly your assets turn into cash.
Does a very high ratio mean good health?
Not always. A high ratio can mean cash is sitting idle or stock is piling up. Look at the trend over time too.
Where do I get these numbers?
Your balance sheet lists current assets and current liabilities. Your bookkeeping software or accountant can run it for you.
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