Result
Current ratio
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Current ratio = current assets ÷ current liabilities. A value of 1.85 means there's $1.85 of assets convertible to cash within a year for every $1 of short-term debt.
Net working capital = current assets − current liabilities — the same idea in cash rather than a ratio. A negative value means current assets aren't enough to cover current liabilities even with no margin.
A range of roughly 1.5–3 is often considered healthy: lower means a risk of not paying obligations on time, much higher may mean cash is tied up inefficiently in inventory or receivables instead of being put to work. But what's normal varies a lot by industry, so the ratio is more useful tracked over time and against similar companies than against one universal number.
A stricter version of the same idea is the quick ratio: it excludes inventory from assets, since inventory can't always be sold quickly at full value.