Plain-language questions
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KPI · Finance
Current ratio: formula and example.
The current ratio is current assets divided by current liabilities. It shows to what extent a company can pay debts falling due within a year from assets that turn into cash within a year, such as cash, receivables and stock. It is the best-known measure of short-term liquidity.
Current ratio formula
Current assets ÷ current liabilities
Worked example
At the end of 2025 Acme Groothandel had €300,000 in cash, €1,500,000 of receivables, €1,400,000 of stock and €100,000 of other current assets, €3,300,000 in total. Current liabilities were €2,200,000. The current ratio is €3,300,000 ÷ €2,200,000 = 1.5.
Fictitious figures for Acme Groothandel, a sample wholesaler.
How to read this KPI
A current ratio above 1 means current assets exceed current liabilities; below 1 the reverse is true. A higher ratio gives more of a buffer, but can also point to too much stock or idle cash. Compare it with previous years, with any covenants agreed with your bank and, within the same sector, with similar businesses.
Pitfalls with current ratio
- Counting obsolete stock or uncollectable receivables as if they will quickly turn into cash.
- Looking only at the year-end balance, when seasonal patterns make the ratio swing during the year.
- Forgetting the current portion of long-term loans when adding up current liabilities.
SQL & DAX
Calculating current ratio in SQL and DAX
Two examples on a fictitious data warehouse for Acme Groothandel: a PostgreSQL query and a measure for a Power BI model. Adjust table and column names to your own model.
WITH bal AS (
SELECT account_group, SUM(amount) AS balance
FROM gl_entries
WHERE entry_date <= current_date
AND account_group IN ('cash', 'receivables', 'inventory', 'other_current_assets', 'current_liabilities')
GROUP BY account_group
)
SELECT SUM(balance) FILTER (WHERE account_group <> 'current_liabilities') AS current_assets,
SUM(balance) FILTER (WHERE account_group = 'current_liabilities') AS current_liabilities,
ROUND(SUM(balance) FILTER (WHERE account_group <> 'current_liabilities')
/ NULLIF(SUM(balance) FILTER (WHERE account_group = 'current_liabilities'), 0), 2) AS current_ratio
FROM bal;Balance = CALCULATE(SUM(GL[Amount]), FILTER(ALL('Date'), 'Date'[Date] <= MAX('Date'[Date])))
Current Ratio =
DIVIDE(
CALCULATE([Balance], GL[AccountGroup] IN {"cash", "receivables", "inventory", "other_current_assets"}),
CALCULATE([Balance], GL[AccountGroup] = "current_liabilities")
)In ENABLE
Tracking this KPI in ENABLE
In your Power BI dashboard
Define the KPI as a measure in your Power BI model and show it in the portal, with "Last refreshed" next to it. Access profiles and optional row-level security decide who sees which figures.
Custom dashboards (pilot)
Add the KPI as a tile to a custom dashboard, compared with last year. The Dashboard Builder is a pilot and can be switched on per client.
Monthly targets
With the built-in Targets app you set a target for the KPI per month, so you see actuals and target side by side.
FAQ
Frequently asked questions
How do you calculate the current ratio?
Divide current assets (cash, receivables, stock and other current assets) by current liabilities. With €3,300,000 of current assets and €2,200,000 of current liabilities, the current ratio is 1.5. Take both figures from the same balance sheet date.
What is the difference between the current ratio and the quick ratio?
The quick ratio leaves stock out of current assets, the current ratio includes it. The quick ratio is therefore stricter: it shows whether you can pay short-term debts without selling stock first.
What does a current ratio below 1 mean?
A current ratio below 1 means current liabilities exceed current assets. The business then depends on future cash flows or extra financing to pay its short-term debts. Whether that is a problem depends on how quickly stock and receivables turn into cash.
Further reading
- KPI libraryFinancial KPIs: formulas and examplesFinancial KPIs show how profitable, liquid and solvent an organisation is. The data usually comes from your accounting package or ERP: general ledger entries, invoices and open items.Read more
- ResourcesHow to build a KPI dashboard: steps and examplesA KPI dashboard is an overview of the key figures you use to steer towards your goals, such as revenue, margin, on-time delivery or absenteeism. A good KPI dashboard does not start with the software, but with the decisions it needs to support. You then choose a limited number of KPIs, define them, sketch the dashboard and only then build it.Read more
- SolutionPower BI dashboard portal: share dashboards securelyShare your Power BI dashboards securely in your own portal, with role-based access.Read more
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