Current Ratio Calculator
The current, quick and cash ratios from a balance sheet: how many times over short-term liabilities are covered, counting ever more liquid assets.
Result
Current ratio: 1.74
A snapshot on one balance sheet date. No healthy ratio is given, because it depends on the business.
- Working capital
- $145,000.00
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Results are arithmetic estimates based on the assumptions you enter, not accounting, tax, investment or lending advice. Forecasts can be wrong and important decisions should be checked with a qualified adviser. Read the full disclaimer
How to use the Current Ratio Calculator
- Enter current assets and current liabilities from the same balance sheet.
- Optionally enter how much of the assets is inventory and prepaid costs, for the quick ratio.
- Optionally enter how much is cash, for the cash ratio.
The formulas
current ratio = current assets ÷ current liabilitiesquick ratio = (current assets − inventory − prepaid costs) ÷ current liabilitiescash ratio = cash ÷ current liabilitiesA ratio of 1.74 means there is 1.74 of the relevant assets for every 1 due within a year. Below 1 means those assets alone would not cover what is due.
Read them together
The gap between the ratios shows where liquidity sits. With 340,000 of current assets, 120,000 of inventory, 8,000 prepaid, 62,000 of cash and 195,000 of liabilities, the ratios are 1.74, 1.09 and 0.32. Most of the cover depends on collecting receivables and selling stock, not on cash already held.
What the diagram shows
Current assets as one bar, in order from most to least liquid: cash, then other quick assets such as receivables, then inventory and prepaid costs.
With your numbers
- Current = $340,000.00 ÷ $195,000.00 = 1.7436
- Quick = ($340,000.00 − $128,000.00) ÷ $195,000.00 = 1.0872
- Cash = $62,000.00 ÷ $195,000.00 = 0.3179
Quick reference
A snapshot on one balance sheet date. No healthy ratio is given, because it depends on the business.
| Example | Current ratio |
|---|---|
| 340,000 and 195,000, full detail | 1.74 |
| 340,000 and 195,000, totals only | 1.74 |
| Inventory-heavy: 150,000 of 200,000 | 2 |
| Mostly cash | 1.5 |
| Below one | 0.57 |
| No current liabilities |
Common questions about the Current Ratio Calculator
- What is the difference between the three ratios?
- Each counts only assets that turn into cash faster than the one before. The current ratio counts all current assets. The quick ratio, also called the acid test, leaves out inventory and prepaid costs, which cannot pay a bill until they are sold or used. The cash ratio counts only cash. So the cash ratio is never above the quick ratio, and the quick ratio is never above the current ratio.
- Why can a good current ratio mislead?
- Because inventory counts toward it. A business with 200,000 of current assets, 150,000 of them stock, and 100,000 of liabilities has a current ratio of 2. Its quick ratio is 0.5: without selling stock, it can cover only half of what it owes.
- What is a healthy current ratio?
- This page does not give one. A supermarket that sells stock for cash daily can run on a low ratio; a manufacturer that waits months to be paid needs a higher one. Compare the ratio with your own history and with how quickly your assets really turn into cash.
- Can a ratio be too high?
- It can be a sign of cash or stock sitting idle that could be used in the business or returned. The ratio does not say which, so look at what the assets are.