What is the current ratio? Formula, ranges and example
What is the current ratio?
The current ratio measures current assets relative to current liabilities and is an indicator of short-term payment capacity. Divide current assets by current liabilities and multiply by 100 to express it as a percentage.
Formula
Current ratio (%) = current assets ÷ current liabilities × 100
- The API returns current_ratio as a multiple: 1.0 = 100% and 2.0 = 200%. Hachiquant rankings display percentages.
- Missing inputs or zero current liabilities make the ratio unavailable, not zero.
Ranges and interpretation
| Range | Interpretation |
|---|---|
| <100% | Current assets are below current liabilities. Examine cash conversion and refinancing needs; this is not an automatic bankruptcy verdict. |
| 100%–<200% | Current assets cover current liabilities on paper, but inventories and receivables may not become cash when needed. |
| ≥200% | More balance-sheet coverage, not guaranteed liquidity or an investment recommendation. |
Worked example from a filing
Year ended March 31, 2026 (–)
IFRS · Consolidated · JPY
| Input | JPY million |
|---|---|
| Current assets | 42,824,081 |
| Current liabilities | 33,605,019 |
42,824,081 ÷ 33,605,019 × 100 = 127.4%
Toyota’s 127.4% means about ¥127.4 in current assets per ¥100 in current liabilities. It does not mean all those assets are immediately available cash.
Source elements
- Current assets
- jpigp_cor:CurrentAssetsIFRS
- CurrentYearInstant
- Current liabilities
- jpigp_cor:TotalCurrentLiabilitiesIFRS
- CurrentYearInstant
What to watch
- Inventory quality and receivable collection affect how readily assets can become cash.
- Fast-cash-cycle retailers can sometimes operate at lower ratios.
- Extremely small current liabilities can inflate the ratio.
- Compare the same industry, period, accounting standard and consolidation scope.
- Banks, insurers and brokers may not use this current/non-current presentation.