# Current Ratio Calculator

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

Current Ratio:
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Background Information

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. Naga’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%