# Current Ratio Calculator

## What is a Current Ratio?

When a company's current assets are directly compared to the company's liabilities, it's known as the current ratio. Our current ratio calculator will look at the relationship between these two numbers for the year on year financial trends.

To use our Current Ratio Calculator, simply:

- Enter both the Asset Value and the Liability Value.
- The calculator will calculate the ratio as you type.
- A graph will be displayed as you type.

## How is the Current Ratio Calculated?

Our current ratio calculator will allow you to calculate not only the current ratio, but also the historical financial ratios as well as the year on year ratio changes. The calculator will then provide you with the trends and a graph using your financial year on year metrics.

- Take the first year that you have any financial figures for. With our calculator you are only able to go as far back as 2005.
- Add both the financial data for your assets as well as your liabilities for each year, entering your most latest results at the end.
- Our Current Ratio Calculator will then go on to calculating the ratios as well as updating the trend graph that is provided, as you enter the data.

## How to Calculate Your Current Ratio

In order to calculate your current ratio, simply take your current asset value and divide it by the value of your current liabilities.

### What Can Current Ratios Be Used For?

The most common use of current ratios is when they are used in order to find out whether or not a company is performing at either its best or its worst.

The most effective use of current rations is when they are compared against historical data. As shown by our Current Ratio Calculator, this will usually be the year on year comparison. Most corporations tend to keep a record of their current rations on either a monthly basis or a quarterly basis.

A more important use of current ratios and historical ratio trends, are when a company is trying to take out a loan. Credit agencies use these in order to determine whether or not you are suitable for a lone.

Check out these other free online investment calculators:

- - EBITDA Calculator
- - Perpetuity Calculator
- - Effective Annual Rate Calculator