Dr. Paul Borosky, DBA, MBA
Business Consultant & Author
Guide 25 of 34 · Liquidity Ratios
Current Ratio vs. Quick Ratio (Apple Example)
Apple’s current ratio is 0.89. It is fine. Here is why.
Every textbook says a current ratio under 1 is a warning sign. One of the most valuable companies on earth has run below 1 for four straight years. Here is how to calculate the current ratio and the quick ratio, what each one tells you, and how to tell a real warning from a deliberate choice.
Last Updated: 10/27/2026 · Written by Dr. Paul Borosky, DBA, MBA
The Short Answer
What Is the Difference Between the Current Ratio and the Quick Ratio?
Textbook Definition
The current ratio divides current assets by current liabilities. The quick ratio, also called the acid-test ratio, removes inventory from current assets first. Both measure a company’s ability to meet obligations due within 12 months.
In Plain English
Can the company pay the bills due this year with what it can turn into cash this year? The current ratio counts everything. The quick ratio drops inventory, because you cannot always sell it fast. Quick is the tougher test.
Current Ratio
Current Assets ÷ Current Liabilities
Apple, fiscal 2025: 0.89
Quick Ratio
(Current Assets − Inventory) ÷ Current Liabilities
Apple, fiscal 2025: 0.86
Both pull from the balance sheet. Current assets are cash, short-term investments, receivables, and inventory. Current liabilities are everything due within a year.
One Real Company
Apple’s Current and Quick Ratios, 2021 to 2025
Apple started the period just above 1. It has been below 1 ever since. Watch how small the gap between the two ratios stays.
| Line | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Current assets | 147,957 | 152,987 | 143,566 | 135,405 | 134,836 |
| Inventory | 5,718 | 7,286 | 6,331 | 4,946 | 6,580 |
| Current liabilities | 165,631 | 176,392 | 145,308 | 153,982 | 125,481 |
| Current ratio | 0.89 | 0.87 | 0.99 | 0.88 | 1.07 |
| Quick ratio | 0.86 | 0.83 | 0.94 | 0.85 | 1.02 |
| Net working capital ($M) | (17,674) | (23,405) | (1,742) | (18,577) | 9,355 |
Source: Apple Form 10-K filings, fiscal 2021 to 2025, as analyzed in the book.
The Method
How to Use the Current and Quick Ratio in 5 Steps
Calculate both ratios.
Current ratio: current assets ÷ current liabilities. Quick ratio: subtract inventory first. Both numbers come straight from the balance sheet.
Compare each one to 1.0.
Above 1 means short-term assets cover short-term bills. Below 1 is a caution flag, not a verdict. It tells you which question to ask next.
Check the gap between them.
A big drop from current to quick means a lot of inventory. Apple’s gap is small (0.89 to 0.86) because it carries little stock. Microsoft’s is almost zero.
Read five years, not one.
Apple went from 1.07 in 2021 to 0.89 in 2025. A slide like that is worth noticing even when the company is healthy.
Check cash flow and the rival.
A ratio under 1 is fine when operating cash flow is huge and steady. Compare to a direct competitor and the industry before you decide.
Why Apple Gets a Pass
Apple brought in $111.5 billion of cash from operations in fiscal 2025. It pays short-term bills from cash coming in, not cash sitting still, and sends the rest back to shareholders through dividends and buybacks. A small company with a 0.89 current ratio and thin cash flow is a different story. Grocery stores often run below 1 too. The ratio is a question, not an answer. The cash flow statement answers it.
Compare It
Apple vs. Microsoft: Opposite Sides of the 1.0 Line
| Latest fiscal year | Apple | Microsoft |
|---|---|---|
| Current ratio | 0.89 | about 1.3 |
| Quick ratio | 0.86 | about 1.3 |
| Cash + short-term investments | about $55B | about $95B |
| Net working capital | −$17.7B | about +$50B |
Microsoft’s fiscal year ends in June, Apple’s in September.
Same industry. Both enormously profitable. One keeps a big cushion, one runs lean. Microsoft’s quick ratio barely differs from its current ratio because it carries almost no inventory to strip out. The cash ratio and net working capital round out the four liquidity measures.
Beginner Traps
What Do Beginners Get Wrong About These Ratios?
- Treating 1.0 as a law instead of a rule of thumb.
- Ignoring the industry. Retailers and grocers often run below 1.
- Thinking higher is always better. Too high can mean idle cash.
- Skipping the gap between current and quick, where inventory problems hide.
- Reading one year instead of the five-year trend.
- Never checking operating cash flow before calling a ratio a red flag.
How the Book Grades Apple’s Liquidity
From the Book
The Comparison That Settles It
Liquidity Ratios · Current Ratio
Apple vs. Microsoft
Two of the strongest companies on earth, in the same industry, on opposite sides of the famous 1.0 line. That should tell you loud and clear that Apple's sub-one ratio is a deliberate choice, not a sign of weakness.
Liquidity, asset, profitability, debt, and market ratios, all run on Apple and graded. It is all in the book.
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Current Ratio and Quick Ratio Questions
What is a good current ratio?
What is the difference between the current ratio and the quick ratio?
Can a current ratio be too high?
Why is Apple's current ratio below 1?
Keep Going
Related Guides
Every formula in one place: the financial ratios cheat sheet. Every term: the glossary.
Written by Dr. Paul Borosky, DBA, MBA, business consultant, author, and adjunct finance instructor with an MBA focused in finance.
This page is for general educational purposes only. It is not investment, financial, tax, accounting, or legal advice, and nothing here is a recommendation to buy or sell any security. Apple and Microsoft figures come from their public filings as analyzed in the book. Apple and Microsoft are trademarks of their respective owners, and this page is not affiliated with or endorsed by either company.