Liquidity Ratios Calculator
Understand your business's ability to cover its bills. This tool provides a clear picture of your cash position and short-term financial stability.
What are liquidity ratios?
Liquidity ratios are financial metrics used to determine a company's ability to pay off its short-term debt obligations without raising external capital. They measure how quickly assets can be converted into cash.
What is the "Quick Ratio"?
The Quick Ratio (or Acid-Test Ratio) measures a company's ability to meet short-term obligations with its most liquid assets. It excludes inventory from current assets because inventory can be difficult to sell quickly.
What is a "good" current ratio?
A current ratio between 1.5 and 3.0 is generally considered healthy. A ratio below 1.0 indicates that the company may have trouble paying its short-term debts, while a very high ratio might mean the company is not using its assets efficiently.
How is the "Cash Ratio" different?
The Cash Ratio is the most conservative liquidity metric. It only considers actual cash and cash equivalents (like marketable securities) against current liabilities, ignoring accounts receivable and inventory entirely.