How to compute the current ratio (a liquidity check)

1. Enter current assets

   "Current assets" — line items expected to convert to cash within 12 months: cash, receivables, inventory, short-term investments. Pull this from the latest balance sheet's current-asset subtotal.

2. Enter current liabilities

   "Current liabilities" — what's due within 12 months: payables, short-term debt, accrued expenses, current portion of long-term debt. Use the matching balance sheet subtotal.

3. Press Run

   Result is currentRatio = currentAssets / currentLiabilities, rounded to 4 decimals. Liabilities of 0 throws "Liabilities cannot be 0." — a meaningless ratio.

4. Interpret the number

   Above 1 = enough short-term assets to cover short-term debts. 1.5–3 is generally healthy; under 1 is a warning. Compare to industry peers — retail and tech run with different working-capital profiles.