Financial Calculators

## current ratio calculator

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\$
Current Ratio
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 ◦How to calculate your current ratio ◦Step 1: Gather the necessary financial information ◦Step 2: Enter your total current assets ◦Step 3: Enter your total current liabilities ◦Step 4: Press "calculate" ◦Example of how to calculate your current ratio ◦Who would need to calculate the current ratio?
Calculating your current ratio is a relatively straightforward process, divide your current assets by your liabilities. Here's how to use the calculator to find your current ratio:

## Step 1: Gather the necessary financial information

To calculate your current ratio, you'll need to know your total current assets and your total current liabilities. You can find this information on your company's balance sheet.

## Step 2: Enter your total current assets

Once you have the necessary information, enter your total current assets into the calculator. Current assets include cash and other assets that can be easily converted into cash within a year, such as accounts receivable, inventory, and prepaid expenses.

## Step 3: Enter your total current liabilities

Next, enter your total current liabilities into the calculator. Current liabilities include any debts or obligations that must be paid within a year, such as accounts payable, short-term loans, and taxes owed.

## Step 4: Press "calculate"

After entering your current assets and current liabilities, press the "calculate" button. The calculator will divide your current assets by your current liabilities to determine your current ratio.

## Example of how to calculate your current ratio

For example, let's say your company has \$200,000 in current assets and \$100,000 in current liabilities. To find your current ratio, you would divide \$200,000 by \$100,000, which equals 2. This means your company has \$2 in current assets for every \$1 in current liabilities.
The current ratio is an important financial ratio that indicates a company's ability to pay off its short-term debts. A current ratio of 2 or higher is generally considered healthy, indicating that a company has enough current assets to cover its current liabilities. A current ratio of less than 1, on the other hand, suggests that a company may have trouble meeting its short-term obligations.

## Who would need to calculate the current ratio?

Various jobs in finance, accounting, and business management require the knowledge of calculating and analyzing the current ratio. Some of these jobs include:
• Financial Analysts: They use the current ratio and other financial ratios to analyze a company's financial health and make recommendations for investment or lending.
• Accountants: They use the current ratio to prepare financial statements and reports, assess a company's financial position, and provide advice on financial decisions.
• Credit Analysts: They use the current ratio and other financial ratios to assess a company's creditworthiness and make recommendations on whether or not to grant credit.
• Business Managers: They use the current ratio to monitor a company's liquidity and cash flow, identify potential financial risks, and make decisions related to financing and investment.
• Auditors: They use the current ratio to evaluate a company's financial statements, assess the effectiveness of internal controls, and identify potential fraud or mismanagement.
• Article author
John Cruz
John is a PhD student with a passion to mathematics and education. In his freetime John likes to go hiking and bicycling.
###### Calculate Your Current Ratio Of Assets To Liabilities English
Published: Wed Mar 01 2023
In category Financial calculators

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