Overview
Enter current assets and current liabilities to calculate the current ratio - current assets ÷ current liabilities - a liquidity metric that estimates whether a company has enough short-term assets to cover its short-term obligations. A ratio of 1.0 means current assets exactly equal current liabilities; a ratio above 1 suggests a comfortable liquidity cushion, while a ratio below 1 can signal potential difficulty meeting near-term obligations. The result includes a plain-language assessment (strong, healthy, moderate, or weak) based on commonly cited thresholds, though what counts as healthy varies by industry and business model. Useful for credit analysis, comparing a company's liquidity year over year, or coursework in financial ratio analysis. Runs entirely client-side, and this is an informational estimate, not financial advice.
Best for: Assessing whether a company's short-term assets can cover its short-term liabilities
How to use this tool
- Enter current assets. Cash, receivables, inventory, and other assets expected to convert to cash within a year.
- Enter current liabilities. Obligations due within a year, such as accounts payable and short-term debt.
- Read the ratio and assessment. The current ratio, along with a plain-language strong/healthy/moderate/weak assessment.
Frequently asked questions
It means current assets exactly equal current liabilities - in theory, the company could cover all of its short-term obligations by converting its short-term assets to cash, with nothing left over as a cushion.
Generally yes for liquidity, but an unusually high ratio can also indicate the company is holding excess cash or inventory rather than deploying it productively. What counts as a healthy ratio varies by industry, so this is more useful compared against industry peers or the same company's own history than a single universal benchmark.
The current ratio compares short-term (current) assets against short-term (current) liabilities - a balance-sheet snapshot of near-term liquidity. Cash flow to debt ratio instead compares a full year of operating cash flow against total debt (not just current liabilities) - a broader measure of solvency over a longer horizon.