Current Ratio Calculator

Formula

The formula to calculate the current ratio (CR) is:

\[ CR = \frac{CA}{CL} \]

Where:

$ CR $ is the current ratio.
$ CA $ is current assets ($).
$ CL $ is current liabilities ($).

What is a Current Ratio?

A current ratio is a metric used to assess a company’s ability to pay off its short-term liabilities with its short-term assets. It is calculated by dividing the total current assets of a company by its total current liabilities. This ratio represents the company’s liquidity position and indicates its ability to meet its short-term obligations.

Example Calculation

Consider an example where:

Current Assets (CA): $150,000
Current Liabilities (CL): $100,000

Using the formula to calculate the current ratio:

\[ CR = \frac{150000}{100000} = 1.5 \]

This means that the current ratio for this example is 1.5.