Current Ratio Calculator

How to Use the Current Ratio Calculator

1. Enter the total value of current assets in the "Current Assets" field.
2. Enter the total value of current liabilities in the "Current Liabilities" field.
3. Click the "Calculate" button to compute the current ratio.
4. The calculator will display the current ratio and an interpretation of its meaning.

Understanding the Current Ratio

The current ratio is a liquidity ratio that measures a company's ability to pay off its short-term liabilities with its short-term assets. It is calculated by dividing current assets by current liabilities.

Interpreting the Results

• A current ratio of 2 or higher is generally considered healthy, indicating that the company has sufficient short-term assets to cover its short-term obligations.
• A current ratio between 1 and 2 is considered moderate, suggesting that the company may have some difficulty meeting its short-term obligations but is not in immediate danger.
• A current ratio below 1 is a red flag, indicating that the company may have difficulty paying its short-term debts.

Important Notes

The current ratio is a useful tool for assessing a company's short-term financial health, but it should not be used in isolation. Other financial metrics and qualitative factors should also be considered when evaluating a company's overall financial position.