ClarityHow to use this tool
- Enter current assets, current liabilities.
- Select Calculate to view the result.
- Check the method and assumptions below before using the result.
The method, explained
Current ratio = current assets ÷ current liabilities. A result of 1.6 means 1.60 of current assets for each 1 of current liabilities.
A WORKED EXAMPLE
80,000 in current assets divided by 50,000 in current liabilities gives 1.6×.
What to keep in mind
Zero liabilities give an undefined finite ratio. Asset quality, due dates and industry practices affect interpretation; no universal healthy threshold is assumed.
Common questions
Is this the same as working capital?
No. Working capital is an amount; current ratio divides the two balances.
Does the ratio guarantee bills can be paid?
No. Current assets may not become cash before liabilities fall due.
Methodology maintained by ClarityKit. How these tools are built and checked.