# Current Ratio

Date created: Oct 12, 2022  •   Last updated: Oct 12, 2022

## What is Current Ratio?

Current Ratio measures the ability of your organization to pay all of their financial obligations in the short term, which is generally one year. This ratio accounts for your current assets, such as accounts receivable, and your current liabilities, such as accounts payable, to help you understand the solvency of your business.

### Current Ratio Formula

ƒ Sum(Current Assets) / Sum(Current Liabilities)

### How to calculate Current Ratio

A company has the following: Current assets = \$6,877,756 Current liabilities = \$438,332 The current ratio is therefore calculated as follows: \$6,877,756 / \$438,332 = 15.69 This company is able to cover its current liabilities 15 times with their current assets showing a healthy Working Capital Ratio.

### Start tracking your Current Ratio data

Use Klipfolio PowerMetrics, our free analytics tool, to monitor your data. Choose one of the following available services to start tracking your Current Ratio instantly.

### What is a good Current Ratio benchmark?

Generally speaking, a ratio between 1.5 and 3 is preferable and indicates strong financial performance.

### How to visualize Current Ratio?

Ratios are usually expressed as single-digit numbers so it would be optimal to visualize Current Ratio with a summary chart. Summary charts compare current values to a previous time period.

### Current Ratio visualization example

Current Ratio

2

0.53

vs previous period

#### Summary Chart

Here's an example of how to visualize your current Current Ratio data in comparison to a previous time period or date range.

Current Ratio

#### Chart

Measuring Current Ratio