Current Ratio Calculator

With the help of this current ratio calculator, you can quickly evaluate the financial health of your business by measuring its ability to meet the liabilities (debts or obligations) when they become due.

Why Use The Current Ratio? 

A current ratio warns about the condition of the business. It shows whether the business is capable of paying back the debts or not. It is good to find out the current ratio on a monthly, or quarterly basis because if you will calculate it on a yearly basis, then you will end up with liquidity problems and it will be too late to take the necessary actions. 

Current Ratio Formula:

The current Ratio is one of the most vital calculations that lets you calculate the ability of a company to pay off its debts.

Use the following formula to calculate the current ratio manually:

Current Ratio Formula = Current Assets / Current Liabilities

How To Calculate Current Ratio?

Go through the following steps to calculate the current ratio precisely:

• First, Determine the value of the current assets.
• Calculate the current liabilities. 
• Put these two values in the above-mentioned current ratio formula and that’s it. 

If you want to save time then get the assistance of the online current ratio formula calculator because it will let you perform the current ratio accounting in a matter of seconds. 

Example:

Let’s suppose there is a company A and when you examine the balance sheet of this company, it looks like this:

• Cash = $85,000
• Accounts Receivable = $50,000
• Inventory = $26,000
• Stock Holdings = $8,000
• Current Liabilities = $210,000

Now how to find current ratio. 

Solution:

Current Ratio = Current Assets / Current Liabilities

Current Ratio = (Cash + Accounts Receivable + Inventory + Stock Holdings) / Current Liabilities

Current Ratio = (85,000 + 50, 000+ 26,000+ 8,000)/210,000 = 0.85

The current ratio is less than 1 which shows that it seems impossible for the company to pay its debts in the the defined payback period.  

Working OF Current Ratio Calculator:

Simply follow a couple of straightforward steps to perform the current ratio calculation with our financial ratio calculator.

Inputs:

• Simply, add the values of the “current liabilities” and “current assets” in the designated fields
• Tap on the “calculate” button and that’s it

Output:

• Current Ratio
• Steps-by-step Current Ratio Calculation 

References:

From the source of investopedia.com: Current Ratio Explained With Formula

From the source of Wikipedia: Current Ratio