Canonical formula calculator
CURRENT RATIO
Whether you have enough short-term assets to cover your short-term obligations — the most basic liquidity test.
Cash, accounts receivable, inventory, and other assets you expect to convert to cash within 12 months.
Accounts payable, short-term debt, and other obligations due within 12 months.
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Optional — helps us match this calculation against relevant case studies (coming soon).
What this tells you
Current ratio compares short-term assets (cash, receivables, inventory) to short-term liabilities (payables, short-term debt, near-term obligations). A ratio above 1.5 is generally healthy. Between 1.0 and 1.5 is okay but tight. Below 1.0 means you might not be able to pay near-term bills without raising cash or selling assets.
When to use it
Calculate current ratio at month-end or quarter-end. Watch the trend. A declining current ratio is an early warning sign that working capital is deteriorating. Banks, lenders, and sophisticated suppliers will calculate this for you when evaluating credit risk — better to know your own number first.
What it doesn’t tell you
Current ratio treats all current assets equally, but inventory is much less liquid than cash. A 2.0 ratio dominated by stale inventory is far weaker than a 1.5 ratio dominated by cash and receivables. For a stricter test, calculate the quick ratio (current ratio without inventory).
Coming soon
Cases, plays, and benchmarks for this metric will appear here as the Moonshot knowledge libraries grow. For now: log in to track your number over time and Moonshot will surface trend warnings when the substrate fills in.