Ratios guide
How to use the current ratio calculator
Worked example
Current ratio: calculation example
$180,000 current assets divided by $100,000 current liabilities gives a 1.8 current ratio. Working capital is $80,000.
Asset quality matters. Slow inventory and overdue receivables may not provide the same liquidity as cash.
Common question
Understand the result
Does a ratio above 1 guarantee enough cash?
No. A business can have more current assets than liabilities while facing a cash shortage if customers pay late or inventory cannot be sold quickly.