Working Capital & Liquidity Ratios Calculator
Calculate current ratio, quick ratio, and working capital to assess business liquidity
About this calculator
This Working Capital & Liquidity Ratios Calculator helps businesses evaluate their short-term financial health and ability to meet immediate obligations. It computes three essential liquidity metrics: current ratio (current assets divided by current liabilities), quick ratio (liquid assets divided by current liabilities), and working capital (current assets minus current liabilities). These calculations provide crucial insights into cash flow management, operational efficiency, and financial stability, enabling informed decisions about investments, expansions, and day-to-day operations.
How to use
Enter your current assets, current liabilities, and quick assets (cash, marketable securities, accounts receivable) from your balance sheet. The calculator will automatically compute your current ratio, quick ratio, and working capital. Review the results to assess your business's liquidity position and compare against industry benchmarks.
Frequently asked questions
What is a good current ratio?
A current ratio between 1.2 and 2.0 is generally considered healthy, indicating sufficient assets to cover short-term debts without excess idle cash.
How does quick ratio differ from current ratio?
Quick ratio excludes inventory and prepaid expenses, focusing only on the most liquid assets, providing a stricter liquidity measure.
What does negative working capital mean?
Negative working capital means current liabilities exceed current assets, potentially indicating cash flow problems or aggressive working capital management.