# Current Ratio Calculator

URL: https://speedycalculator.com/calculators/finance/current-ratio/
Last updated: 2026-10-25

> The current ratio calculator works out a company's current ratio – current assets divided by current liabilities – the most common measure of short-term liquidity, along with working capital and the quick ratio.

## Inputs

- Current assets
- Of which inventory
- Of which prepaid expenses
- Current liabilities

## Results

- Current ratio
- Working capital
- Quick ratio
- Interpretation

## Formula

```
Current ratio = current assets ÷ current liabilities
Working capital = current assets − current liabilities
Quick ratio = (current assets − inventory − prepaid expenses) ÷ current liabilities
```

## Explanation

A current ratio between 1.2 and 2 is generally considered healthy. Below 1 means current liabilities exceed current assets; a very high ratio may mean cash or inventory is not being used efficiently.

### How to use the Current Ratio Calculator

- **Current assets**
- **Of which inventory**
- **Of which prepaid expenses**
- **Current liabilities**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter current assets (with inventory and prepaid expenses) and current liabilities.

### Tips

- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.

### Common mistakes to avoid

- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.

### Inputs explained

FieldWhat to enterCurrent assetsAmount in your currencyOf which inventoryAmount in your currencyOf which prepaid expensesAmount in your currencyCurrent liabilitiesAmount in your currency

### What each result means

- **Current ratio** = [Current assets]÷[Current liabilities]
- **Working capital** = [Current assets] - [Current liabilities]
- **Quick ratio** = ([Current assets] - [Of which inventory] - [Of which prepaid expenses])÷[Current liabilities]

### Example values

How the main result changes when **Current assets** changes and everything else stays at the example values above:

Current assetsCurrent ratio250,0000.83375,0001.25500,0001.67625,0002.08750,0002.51,000,0003.33

## Worked example

Inputs — Current assets: $500,000; Of which inventory: $150,000; Of which prepaid expenses: $20,000; Current liabilities: $300,000.

Results — **Current ratio = 1.67**; Working capital = $200,000.00; Quick ratio = 1.1; Interpretation = Healthy (1–2).

## FAQ

**What is a good current ratio?**
Typically 1.2 to 2.

**What does a current ratio below 1 mean?**
Current liabilities exceed current assets.

**How does it differ from the quick ratio?**
The quick ratio excludes inventory and prepaid expenses.

**What formula does the Current Ratio Calculator use?**
Current ratio = current assets ÷ current liabilities.


## Sources

- [Corporate Finance Institute – financial ratios](https://corporatefinanceinstitute.com/)