Current Ratio Calculator is a tool to determine a firmâ€™s ability to pay off its short-term liabilities with its current assets

- Current Ratio:
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- What does Current Ratio mean?
- The current ratio is a comparison of current assets to current liabilities, calculated by dividing your current assets by your current liabilities. Potential creditors use the current ratio to measure a company's liquidity or ability to pay off short-term debts.

- Formula
- Current ratio = Current assets / Current liabilities

- Example
Mr. Nagaâ€™s Shop sells ice-skating equipment to local hockey teams and $100,000 are his current liabilities and only $25,000 of current assets.

According to the formula, Current ratio is:-

- = $25,000 / $100,000
- = 0.25 or 25%