Current Ratio Calculator
Measure whether a firm has enough short-term assets to cover the liabilities falling due in the next twelve months. Computes the current ratio and working capital from two balance-sheet figures.
Current ratio
0.99
- Working capital
- -£1,742,000,000.00
- Current assets
- £143,566,000,000.00
- Current liabilities
- £145,308,000,000.00
A current ratio below 1.0 means current liabilities exceed current assets — the firm is relying on something other than its own short-term resources to meet obligations falling due inside twelve months. That is not automatically a crisis: large retailers with fast inventory turns and disciplined working-capital management routinely run 0.7–0.9. Outside those sectors, a sub-1.0 ratio that is also deteriorating is a warning sign worth pairing with the quick ratio and the operating cash flow trend.
How to use this calculator
Pull two totals from the most recent balance sheet: total current assets (cash and equivalents, short-term investments, trade receivables, inventory, prepaid expenses, and anything else classified as realisable within twelve months) and total current liabilities (accounts payable, accrued expenses, short-term borrowings, the current portion of long-term debt, deferred revenue due within twelve months). The calculator divides the first by the second to get the current ratio, and subtracts to give working capital. Defaults use Apple’s fiscal 2023 balance sheet ($143.566B current assets, $145.308B current liabilities) producing the headline ratio of 0.988.
How the calculation works
The current ratio is the most widely quoted liquidity check on a balance sheet: it asks whether the assets a firm can convert to cash inside twelve months are enough to settle the liabilities falling due in the same window. A ratio above 1.0 means current assets cover current liabilities with room to spare; below 1.0 means the firm relies on rolling short-term debt, supplier credit, fast inventory turnover, or fresh finance to bridge the gap. The metric pairs with the quick ratio (which strips inventory out of the numerator) and operating cash flow, because the current ratio uses balance-sheet values rather than projected cash flows and can flatter firms with slow-moving stock or stretched receivables.
Worked example
Apple’s fiscal 2023 (ending Sep 30, 2023) 10-K balance sheet reported total current assets of $143.566B (cash and equivalents $29.965B, marketable securities $31.590B, receivables $29.508B, inventories $6.331B, vendor non-trade receivables $31.477B, other current assets $14.695B) and total current liabilities of $145.308B (accounts payable $62.611B, other current liabilities $58.829B, deferred revenue $8.061B, commercial paper $5.985B, term debt $9.822B). Current ratio = 143.566 / 145.308 = 0.988. Working capital = 143.566 − 145.308 = −$1.742B. The sub-1.0 reading is normal for Apple — the firm’s scale, brand strength, and rapid receivables turn let it operate with a very tight working-capital position; the trend, not the level, is what to watch.
Frequently asked questions
What counts as a "good" current ratio?
There is no universal threshold — the right level is heavily sector-dependent. Software, branded consumer goods, and pharma typically run 1.5–2.5 because they carry meaningful inventory, receivables, and accrued R&D commitments. Industrials and chemicals cluster 1.2–2.0. Supermarkets, discount retailers, and quick-service restaurants frequently run below 1.0 — sometimes 0.7–0.9 — because inventory turns extremely fast and supplier credit is generous. Always compare against sector peers and against the company’s own multi-year trend. A current ratio of 1.0 is excellent for a grocer and worrying for a pharma firm.
How is the current ratio different from the quick ratio?
The current ratio uses all current assets in the numerator, including inventory and prepaid expenses. The quick ratio (also called the acid-test ratio) strips inventory and prepayments out, leaving only cash, marketable securities, and trade receivables — the assets that can be converted to cash quickly without selling stock or unwinding a prepayment. The quick ratio is more conservative, especially for businesses where inventory may not move at the assumed book value (fashion retail, technology hardware nearing obsolescence, perishable goods). For a clean read on liquidity, use both: a current ratio above 1.0 paired with a quick ratio well below 1.0 means the firm is relying heavily on inventory to meet short-term obligations.
Can a current ratio be too high?
Yes — very high current ratios (often above ~3.0, though the threshold varies by sector) can signal under-utilised capital rather than strength. Common drivers are excess cash that should be returned to shareholders, slow-moving or obsolescent inventory inflating the assets line, or stretched receivables suggesting collection problems. A ratio that has climbed sharply over recent periods is worth investigating: read the cash, inventory, and receivables movements separately, and pair the ratio with inventory turnover and days sales outstanding before concluding the trend is healthy.
Why is the current ratio sometimes called the working-capital ratio?
Working capital is defined as current assets minus current liabilities — an absolute figure in currency units. The current ratio expresses the same comparison as a multiple. Both describe the same underlying liquidity position from different angles: working capital tells you how many pounds or dollars of cushion the firm has, while the current ratio tells you the multiple of cover. Larger firms often quote working capital in absolute terms while comparison across firms of different sizes is easier using the ratio.
What does a negative working capital figure mean?
Negative working capital — current liabilities exceeding current assets, equivalent to a current ratio below 1.0 — means the firm’s short-term assets do not, on the balance-sheet date, cover the obligations due within twelve months. In capital-intensive or distressed businesses, that is a red flag. In high-turnover retail and food-service models, it is normal and even efficient: supermarkets collect cash from customers immediately while paying suppliers on 30–60 day terms, so the cash cycle naturally produces a sub-1.0 current ratio without solvency strain. Read the figure against the business model before treating it as a warning.
Where on the balance sheet do I find current assets and current liabilities?
Under both IFRS (IAS 1) and US GAAP (ASC 210), the balance sheet groups assets and liabilities into current and non-current classes. Current assets are listed first, with cash and equivalents at the top, then short-term investments, receivables, inventories, and other current assets — every line expected to be realised within twelve months or the operating cycle, whichever is longer. Current liabilities follow the same logic on the other side: payables, accrued expenses, short-term borrowings, the current portion of long-term debt, and deferred revenue due within twelve months. The totals for each section are normally shown explicitly; if not, sum the line items between the section header and the first non-current line.