MihsabaHow to use
Calculate current ratio and working capital from current assets and current liabilities.
- Enter Current assets.
- Enter Current liabilities.
- Calculate, then review the metric definition and comparison limits.
How it is calculated
Example
Current assets of 250,000 and current liabilities of 100,000 give a current ratio of 2.5 and working capital of 150,000.
Important notes
The ratio does not measure inventory quality or receivable collectability. Review the composition of current assets, not only the aggregate.
Worked examples and interpreting results
Current assets of 250,000 and current liabilities of 100,000 give a current ratio of 2.5 and working capital of 150,000.
| Case | Calculation | Result |
|---|---|---|
| Current ratio | 250000 ÷ 100000 | 2.5 |
| Working capital | 250000 − 100000 | 150,000 |
How to check the result
The ratio does not measure inventory quality or receivable collectability. Review the composition of current assets, not only the aggregate.
Frequently asked questions
Is a higher current ratio always better?
Not necessarily; it may signal strong liquidity or inefficiently used current assets.
Should the inputs use the same period?
Yes. Use figures from the same reporting period and accounting definition so balances and flows remain comparable.
Is the result enough for a decision?
No. The metric summarizes a numerical relationship; compare it with company history, industry context, and accounting or operating policies.