# Current Ratio Calculator

Luis Anaya

15 Jan 2021

The current ratio is calculated by dividing Current Assets by Current Liabilities. This ratio is a good indicator of a company's ability to meet short-term debt obligations.

The higher the current ratio, the more liquid the company is. A ratio of less than one is often considered a cause for concern.

### FAQs

Have a question about our this calculator? See our list of frequently asked questions below.

- How is the current ratio of a business calculated?
- The current ratio of a business is calculated by dividing current assets by current liabilities.
- What does the current ratio measure?
- The current ratio measures the short term liquidity of a business.
- Why is the current ratio of a business important?
- A low current ratio can indicate that a business will struggle to generate sufficient cash to settle its bills on time.

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