Current Ratio Calculator & Analysis
The current ratio is a liquidity ratio that measures a company’s ability to pay its short-term obligations. It’s crucial for assessing a company’s financial health and stability.
- Enter the current (cash, cash equivalents, and short-term investments) and liabilities (short-term debt and other current liabilities).
- Click ‘Calculate’.
- View your current ratio and analysis.
The current ratio is calculated as:
Current Ratio = Current Assets / Current Liabilities
| Company | Current | Liabilities | Current Ratio |
|---|---|---|---|
| Apple | $194.6B | $107.5B | 1.81 |
| Microsoft | $139.6B | $85.3B | 1.64 |
| $121.1B | $73.5B | 1.64 |
| Current Ratio | Interpretation |
|---|---|
| 1.0 or above | Good liquidity |
| 0.5 – 1.0 | Acceptable liquidity |
| Below 0.5 | Poor liquidity |
- Keep your current ratio above 1.0 for optimal liquidity.
- Monitor your current ratio regularly to track changes in your liquidity.
- Compare your current ratio with industry benchmarks.
What is a good current ratio?
A good current ratio is 1.0 or above, indicating that a company has enough current assets to cover its current liabilities.
How can I improve my current ratio?
You can improve your current ratio by increasing your current assets (e.g., through sales, collections, or investments) or decreasing your current liabilities (e.g., through payments or negotiations).