Current ratio calculator (liquidity ratios)

Current ratio calculator (liquidity ratios): what it is for

Enter the balance sheet figures (current assets and liabilities, inventory, cash and, if you want, the long-term amounts) and see the four liquidity ratios, with a reading of each one (comfortable, adequate, watch or tight), plus net working capital. The chart compares the ratios with the 1.0 mark, below which there are not enough resources to cover the debts.

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How to use

1. Enter current assets and liabilities.
2. Enter inventory and cash.
3. See the ratios and working capital.

When to use it

• Analyze a company's financial health.
• Prepare a customer credit analysis.
• Study accounting and financial statement analysis.

Frequently asked questions

What is the current ratio?

It is current assets divided by current liabilities: how much the company has in short-term assets (cash, receivables, inventory) for every $1 of debts due within 12 months. Above 1, there is a surplus; below 1, a shortfall.

And the quick ratio?

It is the current ratio without inventory: (current assets − inventory) ÷ current liabilities. It shows whether the company can pay its bills without depending on selling what sits in stock.

What is the cash ratio?

Only cash and immediately available investments divided by current liabilities. It is normal for it to be well below 1, because companies do not keep all their money idle.

What is the ideal ratio?

It depends on the sector. Retailers and supermarkets do fine with a current ratio near 1, because they collect upfront and pay suppliers later; manufacturers usually need 1.5 or more. Compare with peers and with the company's own trend.

Is it really free?

Yes, 100% free. No sign-up, no subscription and no usage limits. All Tools123 are free.

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