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Current Ratio Calculator

Calculate a company's current ratio and working capital from its total current assets and current liabilities — the broadest standard short-term liquidity metric.

Current ratio
2
Working capital
$250,000.00
Where this falls
Within the commonly cited 1.5–3.0 healthy range

How it works

The current ratio measures whether a company's current assets — cash, receivables, inventory, prepaid expenses, and anything else expected to convert to cash or be used up within a year — are enough to cover its current liabilities, the obligations due in that same year. Current ratio = current assets ÷ current liabilities. A ratio of 2.0 means current assets are twice current liabilities.

Working capital is the dollar-amount version of the same comparison: current assets minus current liabilities. The ratio and working capital always agree on direction (a ratio above 1.0 means positive working capital, and vice versa) but the ratio is easier to compare across companies of different sizes, while working capital shows the actual dollar cushion.

The commonly cited 1.5–3.0 'healthy' band referenced in the result is a general accounting textbook heuristic, not a specific lender's or industry's actual requirement — capital-intensive businesses and ones with very fast inventory turnover often run outside it without that alone signaling distress.

FAQ

What's the difference between the current ratio and the quick ratio?

The current ratio counts every current asset, including inventory and prepaid expenses. The quick ratio (also called the acid-test ratio) strips those two out first, since inventory can't always be sold quickly and prepaid expenses can't be turned back into cash at all — making it the stricter, more conservative of the two liquidity measures for the exact same company.

Is a higher current ratio always better?

Not necessarily — a ratio far above the commonly cited 1.5–3.0 range can mean a company is sitting on idle cash or slow-moving inventory instead of investing it productively (growing the business, paying down debt, returning it to shareholders). Like most financial ratios, it's most informative compared against a company's own trend over time or close industry peers, not read as a single absolute score.

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