The current ratio is the most widely used measure of a company’s short-term liquidity — its ability to pay bills, salaries, and suppliers using only the assets it expects to convert to cash within the next twelve months. Lenders, investors, and credit analysts check it before extending credit or valuing a business, and management teams track it to spot cash-flow problems before they become crises.
This calculator computes three complementary liquidity ratios from a single set of inputs, so you get a complete picture in seconds rather than having to run three separate calculations:
- Current Ratio — the headline measure: everything liquid versus everything due
- Quick Ratio (Acid-Test) — strips out inventory, which may be slow to sell
- Cash Ratio — the most conservative view, counting only cash on hand
It also computes Net Working Capital in absolute currency terms, shows a colour-coded liquidity signal, and provides an industry benchmark guide so you can immediately judge whether the numbers are healthy for your sector.
How it works
All three ratios come from the current section of a standard balance sheet. “Current” means within the next operating cycle — almost always 12 months.
The Current Ratio is:
Current Ratio = Current Assets / Current Liabilities
The Quick Ratio removes inventory because goods sitting in a warehouse are not yet cash:
Quick Ratio = (Current Assets - Inventory) / Current Liabilities
The Cash Ratio counts only the most liquid assets:
Cash Ratio = Cash and Cash Equivalents / Current Liabilities
Finally, Net Working Capital converts the ratio into a dollar (or pound, euro, etc.) figure:
NWC = Current Assets - Current Liabilities
A positive NWC means the company has a buffer; negative NWC is a red flag that short-term liabilities exceed short-term resources.
Worked example
Imagine a mid-size manufacturing firm with the following balance-sheet figures:
| Line item | Amount |
|---|---|
| Cash and cash equivalents | $80,000 |
| Accounts receivable | $170,000 |
| Inventory | $150,000 |
| Prepaid expenses | $20,000 |
| Total current assets | $420,000 |
| Accounts payable | $110,000 |
| Short-term bank loan | $80,000 |
| Accrued expenses | $60,000 |
| Total current liabilities | $250,000 |
Plugging those figures in:
- Current Ratio = $420,000 / $250,000 = 1.68x (Good)
- Quick Ratio = ($420,000 - $150,000) / $250,000 = $270,000 / $250,000 = 1.08x (Adequate)
- Cash Ratio = $80,000 / $250,000 = 0.32x (Weak — worth monitoring)
- Net Working Capital = $420,000 - $250,000 = $170,000
The current ratio looks healthy at 1.68x, but the quick ratio of 1.08x shows the firm is leaning on inventory, and the cash ratio of 0.32x signals that if receivables slow down the company could face near-term pressure. This is a common pattern in manufacturing, where the typical current ratio range is 1.2 to 2.0 — so 1.68x is right in the middle of normal.
Every calculation above runs entirely in your browser. No data is ever uploaded or stored.