What this calculator measures
Assesses short-term liquidity by comparing current assets to current liabilities.
Common use cases
Use this model when the inputs describe the same decision, period and customer or product scope.
- Measure short-term asset coverage of current liabilities.
- Use the result with the recorded inputs: Current assets, Current liabilities.
- Compare multiple scenarios before making a finance decision.
Formula
Current ratio = Current assets ÷ Current liabilities
The ratio summarizes balance-sheet liquidity at one date.
Worked example
$200,000 current assets divided by $100,000 current liabilities gives a ratio of 2.0.
How to interpret the result
A ratio above 1.0 indicates more assets than short-term obligations.
Assumptions and limitations
- All current assets are liquid within a 12-month window.