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| Current Ratio Formula: Current Ratio = Current Assets / Current Liabilities | |||
Current Ratio Definition The Current Ratio Calculator instantly lets you calculate current ratio simply by entering in the total current assets and total current liabilities. The current ratio is very similar to the quick ratio (which you can calculate using our Quick Ratio Calculator). The current ratio is a financial liquidity ratio that is most commonly used to measure a company’s ability to meet its short term debt obligations. The higher of a current ratio that a company has then generally speaking the easier it is for them to pay their short term debt obligations. Conversely, if a company has a current ratio of less than 1 then they are considered to be in financial trouble as they would be unable to meet their current debt obligations (if they all came due immediately) using just their current assets (although they could of course use financing or some other source of funds besides short term assets to meet their short term debt obligations). Current assets include things like cash, inventory, receivables, etc. Current liabilities include things like short term debt and short term payables. How to Calculate Current Ratio Let's be honest - sometimes the best current ratio calculator is the one that is easy to use and doesn't require us to even know what the current ratio formula is in the first place! But if you want to know the exact formula for calculating current ratio then please check out the "Formula" box above. |