Current Ratio Calculator
Calculates ability to cover current liabilities with current assets for liquidity analysis
Total current assets divided by total current liabilities
Assessment of the company's short-term financial health
Frequently Asked Questions
What is the current ratio?
The current ratio measures a company's ability to pay short-term obligations due within one year. It divides total current assets by total current liabilities. A ratio above 1.0 means the company has more current assets than current liabilities.
What is a healthy current ratio?
Between 1.5 and 2.0 is generally considered healthy. Below 1.0 suggests the company may struggle to pay short-term debts. Above 3.0 may indicate the company is not efficiently using its assets or investing in growth.
Can a current ratio be too high?
Yes. A very high current ratio (above 3.0) may mean the company has too much cash sitting idle, excess inventory, or uncollected receivables. While it shows strong liquidity, it can signal poor capital allocation.
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