Current Ratio Calculator
Instructions: Use this Current Ratio Calculator to compute the current ratio \((CR)\) for a firm. You need to provide the current assets \((CA)\) and the current liabilities \((CL)\):
Current Ratio Calculator
More about this current ratio calculator that will help you interpret the results provided by this solver: The current ratio corresponds to the ratio between the current assets and current liabilities. This ratio is a measure of short term liquidity and it indicates how many times can current debt and liabilities be paid using only current assets. The current ratio is computed as:
\[ CR = \displaystyle \frac{CA}{CL}\]One question you may be asking is what is a good current ratio. Ideally the current ratio should be greater than 1 (so that you have enough current assets to cover your current liabilities, without needing to get short term loans to cover the shortage). But ultimately, a good current ratio will depend on that standard for the industry that the firm belongs to.
One form of criticism that is on the current ratio is that it includes inventories, which are sometimes hard to turn immediately into cash, so in order to compute real short term liquidity, they should not be included in the calculation. So then, you can use this quick ratio calculator to take this consideration into account.
