Liquidity and leverage ratios ESTIMATE
Current ratio, quick ratio, working capital, and debt-to-equity from balances you already have.
Result ESTIMATE
Four readings of one balance sheet
Current ratio is current assets ÷ current liabilities. Quick ratio removes inventory first, because a shelf of unsold goods is not cash. Working capital is the dollar gap: current assets minus current liabilities. Debt-to-equity is total liabilities ÷ equity. On the sample inputs, current assets of $50,000 over current liabilities of $25,000 is a current ratio of 2.00. Dropping $20,000 of inventory leaves $30,000, so the quick ratio is 1.20. Working capital is $25,000. Liabilities of $40,000 over equity of $60,000 is 0.67.
None of these is a credit score. A ratio of 2 can be a pile of stale receivables. Read the balance sheet accounts, then the cash conversion cycle, before you tell a lender the business is liquid. If current liabilities are zero, the ratios are undefined and the page shows a dash.
What does not belong in “current”
Equipment and accumulated depreciation stay out of current assets. A five-year loan’s principal due after this year stays out of current liabilities; the portion due within a year belongs in. Sales tax payable is a current liability. Owner’s draws are equity, already reflected if your equity number is after draws. The starter chart shows which numbers sit in which section.