Calculate working capital and key liquidity ratios for any business. Enter current assets and liabilities to get current ratio, quick ratio, and cash ratio instantly.
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Cash, receivables due within 12 months, and inventory.
Payables and obligations due within 12 months.
Current ratio 2+ and quick ratio 1+ indicate healthy liquidity.
Quick ratio excludes inventory since it may not be easily liquidated. A current ratio of 2 and quick ratio of 1 are generally considered healthy benchmarks.
A current ratio of 1.5 to 3 is generally healthy. Below 1 means the company cannot cover short-term obligations without additional financing.
Quick ratio excludes inventory — a stricter test. If current ratio is good but quick ratio is poor, the business relies heavily on selling inventory to meet obligations.
Yes. Some large retailers operate with negative working capital because they collect cash before paying suppliers. Context matters.
Slow collection of receivables, excess inventory, rapid expansion, or excessive short-term debt are the most common causes.
A current ratio above 1.5 is generally considered healthy. Below 1.0 means current liabilities exceed current assets — a potential liquidity risk. The ideal ratio varies by industry; retail typically operates at 1.0-1.5.