Current ratio example
If current assets are 10,000 and current liabilities are 5,000, the current ratio is 2.00 : 1.
Accounting Calculator
Financial Ratio Calculator
Calculate common financial ratios for beginner accounting, business review, and homework checks.
Result
Current Ratio
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Enter current assets to calculate current ratio.
Current Assets / Current Liabilities
Explanation
What financial ratios show
Financial ratios compare numbers from financial statements. They can help you review liquidity, debt, profitability, and how efficiently assets are used.
Ratios are useful, but they need context. Compare them with prior periods, similar businesses, and the reason you are calculating them.
Worked examples
Simple examples
Net profit margin example
If net income is 1,250 and revenue is 10,000, the net profit margin is 12.50%.
Formulas
Ratio formulas included
| Ratio | Formula |
|---|---|
| Current Ratio | Current Assets / Current Liabilities |
| Debt-to-Equity Ratio | Total Liabilities / Total Equity |
| Gross Profit Margin | (Gross Profit / Revenue) x 100 |
| Net Profit Margin | (Net Income / Revenue) x 100 |
| Return on Assets | (Net Income / Total Assets) x 100 |
Common mistakes
Mistakes to avoid
Dividing by zero or missing liabilities/assets
Mixing up revenue and profit
Comparing ratios across very different industries
Thinking one ratio tells the whole story
Using old or inaccurate financial statement numbers
Related tools
Continue checking accounting basics
Connect ratio analysis with equation, debit/credit, and trial balance tools.
FAQ
Financial Ratio Calculator FAQs
What is a financial ratio?
A financial ratio compares two numbers from financial statements to help understand performance, position, or risk.
What does the current ratio show?
The current ratio compares current assets with current liabilities to help review short-term liquidity.
What does the debt-to-equity ratio show?
The debt-to-equity ratio compares total liabilities with total equity to show how much financing comes from debt.
What is a good profit margin?
A good profit margin depends on the industry, business model, and time period being compared.
Why do financial ratios need context?
Ratios are more useful when compared with prior periods, similar businesses, or a clear business goal.
Can this calculator help with accounting homework?
Yes. It can help check common ratio calculations, but you should still show your formula and working.