Current Ratio Calculator
Divide current assets by current liabilities to get the current ratio, with the quick ratio and working capital alongside.
The current ratio is current assets divided by current liabilities. A business with $150,000 of current assets and $100,000 of current liabilities has a current ratio of 1.50, so it holds $1.50 of short-term assets for every dollar it owes within a year. Leaving out $40,000 of inventory gives a quick ratio of 1.10.
This calculator is for general education. It is not financial advice or an assessment of any business. The ratios use only the figures you enter and say nothing about the timing of cash flows, the quality of receivables or how quickly inventory sells. Other sources may define quick assets differently. Read a business's full financial statements, or ask an accountant, before relying on these numbers.
Current ratio
1.50
- Quick ratio
- 1.10
- Working capital
- $50,000.00
Ratios to two decimals. The quick ratio here leaves out inventory only, a simplification. Not financial advice.
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About the Current Ratio Calculator
Current assets are what a business expects to turn into cash within a year, such as cash, money customers owe and inventory. Current liabilities are what it must pay within a year, such as supplier bills and short-term debt. Both figures come from the balance sheet. The current ratio divides one by the other: $150,000 / $100,000 = 1.50. Working capital is the same comparison as a difference, $150,000 - $100,000 = $50,000.00. The quick ratio, also called the acid-test ratio, is worked out here by leaving out inventory, a simplification of the textbook definition (see the questions below): ($150,000 - $40,000) / $100,000 = 1.10. A ratio of 1.0 means current assets just match current liabilities. A second business with $80,000 of current assets, $100,000 of current liabilities and $30,000 of inventory has a current ratio of 0.80, a quick ratio of 0.50 and working capital of -$20,000.00, so it owes more in the coming year than its current assets cover. A single ratio says little on its own, and these inputs do not show how quickly receivables are collected or inventory sells.
Frequently asked questions
How do I calculate the current ratio?+
Divide total current assets by total current liabilities, both from the balance sheet. With $150,000 of current assets and $100,000 of current liabilities, the current ratio is 1.50.
What is the difference between the current ratio and the quick ratio?+
The current ratio counts all current assets. The quick ratio leaves out inventory, which can be slow to turn into cash. In the example, the current ratio is 1.50 and the quick ratio is 1.10. The textbook credited below counts only cash, short-term investments and receivables, so it also leaves out prepaid expenses. This calculator leaves out inventory only, a common simplification that can read higher.
What does a current ratio below 1 mean?+
It means current liabilities are larger than current assets, so working capital is negative. In the second example, a ratio of 0.80 goes with working capital of -$20,000.00. The ratio does not show when those bills fall due.
What is working capital?+
Working capital is current assets minus current liabilities, the dollar amount left over after paying the bills due within a year. In the first example it is $50,000.00.
Definitions: OpenStax, Principles of Accounting, Volume 1: Financial Accounting (2019), Appendix A, Financial Statement Analysis: Liquidity Ratios.
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