# Current Ratio Calculator

The current ratio calculator allows you to calculate the comparison between current assets and current liabilities.

## What is a Current Ratio?

The current ratio is a direct comparison of a companies current assets to current liabilities. A current ratio calculator looks to define the relationship that compares between those two numbers for year on year financial trends.

- Enter Asset and Liability Value
- The current ratio calculator will calculate as you type
- A year on year ratio trend graph will build as you type

## How do I calculate the Current Ratio?

Use the current ratio calculator to calculate current ratio, historical financial ratios and year on year ratio changes. The current ratio calculator will then calculate trends and provide a graph of results for your financial year on year metrics.

- Start at the first year you have financial figures for (in this Current Ratio Calculator, you can only go back as far as 2006).
- Add financial data for assets and liabilities for each year, finishing with your latest financial results
- The Current ratio calculator will calculate ratios and update the trend graph as you go along

## How to Calculate the Current Ratio

Calculating the current ratio is very simple. Simple divide a companies current assets by their current liabilities.

### What are Current Ratios used for?

Current Ratios are used to define whether a company, sales line or product is performing well or performing badly.

Current Ratios are most effective when compared against historical data. This will typically be year on year comparison as shown in this Current Ratio Calculator. Corporations will typically track their current ratios on a month by month basis or quarterly

More importantly for companies, current ratios and historical ratio trends are used by credit agencies as part of the means testing for loans and investments. A positive ratio means a good performance period on period (whether month, quarter or year).

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