**Current Ratio**

The Current Ratio is the most widely used liquidity ratio. It measures how comfortably a business can pay short-term liabilities with short-term assets; that is, pay its current liabilities from current assets.

The Current Ratio is important because if you can't pay your short-term liabilities you are out of business; and generally you can only pay your debts with your current assets as they are the more liquid assets

The ratio is also general indicator of the safety of the business. A high Current Ratio generally means a more secure business, as for most businesses it's a pretty straightforward indicator into how easily (or safely) a business can continue through paying all it's debts.

The **Current Ratio** of say, 2.82, simply represents the number of times over your current assets can be used to pay out your current liabilities. So a result of 2.82 simply means your current assets can be used 2.82 times over to pay current liabilities.

*Current Ratio Calculator*

**The calculator asks for:**

*Current Assets*, which are found on the balance sheet.

*Current Liabilities*, which are also found on the balance sheet.

© Copyright 2015 Bidi Capital Pty Ltd. All Rights Reserved. ABN: 34 155 211 233