Divide current assets by current liabilities to measure short-term liquidity — can the business cover what's due within a year?
Current ratio = current assets ÷ current liabilities. Above 1 means assets cover near-term obligations; 1.5–3 is a common healthy range. Very high can signal cash or inventory sitting idle. Ideal levels vary by industry. General information only.
The current ratio compares what a business owns that's cash or soon-to-be-cash (current assets) against what it owes within a year (current liabilities). Above 1 means it can cover its short-term obligations; the comfortable zone is usually 1.5 to 3, depending on the industry.
Current ratio = current assets ÷ current liabilities
Yes — a very high current ratio can mean cash sitting idle or inventory not selling. Liquidity is good; hoarding unproductive assets isn't.
The quick ratio excludes inventory (harder to convert to cash fast), so it's a stricter test of immediate liquidity.
Related: quick ratio calculator · debt-to-equity calculator · break-even calculator · all free calculators.
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Last reviewed: September 2026. Free to use, no signup — Current Ratio Calculator by ToolWise Digital.
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