# How to Calculate Current Ratio in Xero

### Making the most of your Xero data

## What is Current Ratio?

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It is calculated by dividing current assets by current liabilities.

The current ratio is a good indicator of a company's short-term financial health. A ratio of 1.0 or greater is generally considered good. A ratio below 1.0 indicates that the company may have difficulty meeting its short-term obligations.

The current ratio is calculated as follows:

Current Assets / Current Liabilities

## How do you calculate Current Ratio in Xero?

It can be difficult to calculate Current Ratio directly inside of Xero; that's where Causal comes in.

Causal is a modelling tool which lets you build models on top of your Xero data. You simply connect Causal to your Xero account, and then you can build formulae in Causal to calculate your Current Ratio.

## What is Causal?

Causal lets you build models effortlessly and share them with interactive, visual dashboards that everyone will understand.

In Causal, you build your models out of variables, which you can then link together in simple plain-English formulae to calculate metrics like Current Ratio. This makes your models easy to understand and quick to build, so you can spend minutes, not days, on your models.

When you're done, you can share the link to your model with stakeholders. They'll be able to view your model's outputs in a visual dashboard, rather than a jumble of tabs and complex formulae. The dashboards are interactive, letting viewers tweak your assumptions to see how they affect the model's outputs.

Causal lets you add visuals in a single click, letting you plot out graphs and distributions for metrics like Current Ratio.