💧 Liquidity Ratios Calculator
Enter a few balance-sheet figures to get the current, quick and cash ratios and working capital — each explained, with a healthy / caution / concern read.
$1.5 of current assets for every $1 of current liabilities — comfortably able to cover short-term obligations.
Excluding inventory, only $0.9 of liquid assets per $1 of short-term debt — the firm leans on selling stock to meet obligations.
Cash and equivalents cover 30% of current liabilities — a solid immediate cushion.
Current assets exceed current liabilities by $50,000 — positive working capital to fund day-to-day operations.
Liquidity ratios measure whether a company can pay its short-term bills. They are among the more universal ratios, but a very low current ratio can be normal in fast-turnover businesses (like retail), so read them alongside the industry. Educational information, not financial advice. 🔒 In your browser.
How the liquidity ratios calculator works
Liquidity ratios measure whether a company can pay its short-term bills from short-term resources. From current assets, inventory, cash and current liabilities the tool computes the current ratio (current assets ÷ current liabilities), the quick or acid-test ratio (which strips out inventory), the cash ratio (cash alone ÷ current liabilities) and net working capital (current assets − current liabilities) — and interprets each one for you.
These are among the more universal ratios, but context still matters: a current ratio below 1 is a warning for most firms yet normal for fast-turnover retailers who sell inventory before suppliers are paid. Widely-cited healthy bands are a current ratio around 1.5–3 and a quick ratio of 1 or more. This is educational information, not financial advice.
Frequently asked questions
What is a good current ratio?
Often cited as roughly 1.5 to 3: enough short-term assets to comfortably cover short-term liabilities. Below 1 means current assets don't cover current liabilities; well above 3 can signal cash or inventory sitting idle. It varies by industry, so compare to peers.
What is the difference between the current ratio and the quick ratio?
The quick (acid-test) ratio excludes inventory — the hardest current asset to turn into cash quickly — so it's a stricter test of liquidity. A quick ratio of 1 or more means a firm can meet short-term obligations without selling inventory.
What is the cash ratio?
The most conservative liquidity measure: cash and equivalents ÷ current liabilities. A value of 0.2 or higher is generally seen as healthy; most companies run below 1 because holding enough cash to cover every liability would waste earning potential.
What is net working capital?
Current assets minus current liabilities — the short-term financial cushion in dollars. Positive means the firm can fund day-to-day operations; negative can signal strain, though some efficient retailers run negative working capital deliberately.
Are these ratios enough to judge a company?
No — they only cover short-term liquidity. Read them alongside leverage, coverage, profitability and efficiency ratios, the trend over time, and the industry context for a full picture. This tool is educational, not investment advice.
Educational information, not financial advice. These calculators use standard formulas with the figures you enter; results are illustrations, not guarantees. For decisions about your money, consult a qualified, regulated financial professional.