Current Ratio

Liquidity
Updated Apr 2026 • Has calculator

Measures a company's ability to cover short-term liabilities with short-term assets.

What is Current Ratio?

The current ratio divides current assets by current liabilities, providing a snapshot of near-term liquidity. A ratio above 1 means the company has more short-term assets than short-term obligations. However, some highly efficient businesses — particularly large consumer companies with predictable cash flows — routinely operate with ratios below 1 because they can quickly convert operations to cash. Like all liquidity metrics, the current ratio is most informative when benchmarked against industry peers and tracked over time.

Formula

Current Ratio = Current Assets ÷ Current Liabilities

Worked Example

Worked example — Apple Inc. (AAPL)

FY2024 (Sept 28, 2024)

Step 1  Total current assets: $152,987M
Step 2  Total current liabilities: $176,392M
Step 3  Current ratio = $152,987M ÷ $176,392M = 0.87x
Step 4  → Apple covers short-term needs via its massive operating cash flow

Source: Apple Annual Report FY2024 (2024-11-01)

Calculate Current Ratio

Total current assets (USD millions)

Total current liabilities (USD millions)

Current Ratio

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Not investment advice.

How to Interpret Current Ratio

< 1
Below 1 — liabilities exceed current assets
1 – 1.5
Adequate — meets near-term obligations
1.5 – 3
Strong — comfortable liquidity cushion
> 3
Very strong — ample liquidity (or idle assets)

📚 Leverage & Liquidity — Complete the path

  1. D/E Ratio
  2. Current Ratio
  3. Quick Ratio
  4. Cash Ratio
  5. Interest Coverage
Sources
  1. Apple Inc. — Annual Report FY2024
  2. CFA Institute — Financial Reporting and Analysis, 6th ed.
  3. Investopedia — Current Ratio