Current Ratio Calculator
Current Ratio
Calculate current ratio from current assets and current liabilities
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Detailed Analysis
Break down assets and liabilities for a complete picture
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Formula
Current Ratio = Current Assets / Current Liabilities | Working Capital = Current Assets - Current Liabilities
Frequently Asked Questions
What is a good current ratio?
Generally, 1.5 to 2.0 is considered healthy. Below 1.0 means liabilities exceed assets (potential insolvency risk). Above 3.0 may mean the company is not efficiently using assets. Industry averages vary significantly.
What is the difference between current ratio and quick ratio?
The current ratio includes ALL current assets. The quick ratio (acid test) excludes inventory and prepaid expenses, showing only the most liquid assets. Quick ratio is more conservative and useful for industries with slow-moving inventory.
Can a company have a high current ratio and still fail?
Yes. A high current ratio does not guarantee success. If inventory is obsolete or receivables are uncollectible, the ratio is misleading. Cash flow problems can still occur even with a good ratio. Always analyze the quality of assets.
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