Liquidity Ratios Calculator

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Liquidity ratios measure a company’s ability to meet its short-term obligations using its short-term assets. They indicate the firm’s short-term financial health and cash position. More info →

Input

Cost of Goods Sold

Sales Revenue

Current Assets

Current Liabilities

Payables

Receivables

Inventory

Cash & Cash Equivalents

Enter liquidity data to calculate ratios.

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How This Calculator Works

Liquidity ratios check whether a company can pay the bills due within the next year from what it owns in the short term. Each ratio is stricter than the last about what counts as "ready money". The calculator also shows the cash conversion cycle: how many days cash is tied up before it comes back from customers.

The Formulas

Current Ratio = Current Assets ÷ Current Liabilities
Quick Ratio = (Current Assets − Inventory) ÷ Current Liabilities
Cash Ratio = Cash ÷ Current Liabilities

Cash Conversion Cycle = Inventory days + Receivable days − Payable days, where Inventory days = Inventory ÷ COGS × 365, Receivable days = Receivables ÷ Sales × 365, Payable days = Payables ÷ COGS × 365

What Each Input Does

Current Assets / Current Liabilities: What the company owns and owes over the next 12 months. Current liabilities must be greater than zero.
Inventory: Stock on hand. It is excluded from the quick ratio because it takes time to sell.
Cash & Cash Equivalents: Cash and near-cash, used for the cash ratio.
Receivables / Payables: Money customers owe the company, and money the company owes suppliers.
Cost of Goods Sold / Sales Revenue: Yearly figures used to turn inventory, receivables and payables into days.

Step by Step

The three ratios are worked out and shown to 2 decimals.
Inventory, receivable and payable days are worked out on a 365-day year.
The cash conversion cycle is shown in whole days.

Reading the Result

Current ratio 2.00 or more – strong short-term position.

1.00 to below 2.00 – adequate.

Below 1.00 – short-term debts exceed short-term assets.

Quick Example

Current assets 500,000, current liabilities 250,000, inventory 100,000, cash 50,000, receivables 120,000, payables 80,000, COGS 600,000, sales 1,000,000. Current ratio 2.00, quick ratio 1.60, cash ratio 0.20, and a cash conversion cycle of 56 days.