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
| Field | What to enter |
|---|---|
| Current assets | Amount in your currency |
| Of which inventory | Amount in your currency |
| Of which prepaid expenses | Amount in your currency |
| Current liabilities | Amount 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 assets | Current ratio |
|---|---|
| 250,000 | 0.83 |
| 375,000 | 1.25 |
| 500,000 | 1.67 |
| 625,000 | 2.08 |
| 750,000 | 2.5 |
| 1,000,000 | 3.33 |
Formula
Current ratio = current assets ÷ current liabilitiesWorking capital = current assets − current liabilitiesQuick ratio = (current assets − inventory − prepaid expenses) ÷ current liabilitiesWorked 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).
Frequently asked questions
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.