About the Current & Quick Ratio Calculator
The Current & Quick Ratio Calculator Australia helps you measure your business's short-term liquidity and ability to meet immediate financial obligations. These ratios are closely watched by Australian lenders, suppliers, and the ATO when assessing your business's financial health. A strong current ratio shows you can cover debts due within 12 months, while the quick ratio provides a more stringent test. The RBA considers business liquidity when analysing economic conditions, and ASIC recommends that directors monitor liquidity ratios regularly to prevent insolvency. This calculator gives you both ratios instantly, helping you identify potential cash flow problems before they become critical. Whether you are applying for a loan or simply reviewing your financial position, these numbers matter.
What is the Current & Quick Ratio Calculator?
This calculator computes two key liquidity ratios using your balance sheet data. The current ratio divides current assets by current liabilities. Current assets include cash, accounts receivable, inventory, and prepaid expenses. Current liabilities include accounts payable, short-term debt, accrued expenses, and ATO obligations such as PAYG and GST payable. The quick ratio, also called the acid-test ratio, excludes inventory from current assets since inventory may take time to sell. It divides cash plus accounts receivable plus marketable securities by current liabilities. For Australian businesses, the quick ratio is especially important because inventory can be difficult to liquidate quickly. A quick ratio below 1.0 may signal liquidity risk, while a current ratio below 1.5 often concerns lenders and trade creditors.
How to Use This Calculator
- 1**Enter Cash and Cash Equivalents**: Input your cash on hand, bank account balances, and any highly liquid investments readily convertible to cash.
- 2**Enter Accounts Receivable**: Input the total amounts owed to you by customers for goods or services already delivered.
- 3**Enter Inventory**: Provide the value of your unsold stock including raw materials, work-in-progress, and finished goods.
- 4**Enter Other Current Assets**: Include prepaid expenses, short-term investments, and any other assets expected to convert to cash within 12 months.
- 5**Enter Current Liabilities**: Input all debts due within 12 months including accounts payable, short-term loans, credit cards, and ATO liabilities.
- 6**Review Both Ratios**: The calculator displays your current ratio and quick ratio with colour-coded indicators showing whether they fall in healthy, cautionary, or risky territory.
- 7**Export for Reporting**: Download the results for inclusion in loan applications, board reports, or discussions with your accountant.
Worked Australian Example
Practical Example
Take Darwin Electrical Supplies, a wholesale distributor based in the Northern Territory. The business's balance sheet shows: Current assets: Cash $85,000, Accounts receivable $210,000, Inventory $320,000, Prepaid expenses $12,000. Total current assets = $627,000. Current liabilities: Accounts payable $175,000, Short-term loan $50,000, GST payable $28,000, PAYG withholding payable $15,000, Accrued wages $22,000. Total current liabilities = $290,000. Current ratio = $627,000 / $290,000 = 2.16. This indicates the business has $2.16 in current assets for every $1.00 of current liabilities, well above the 1.5 benchmark. Quick ratio = ($85,000 + $210,000) / $290,000 = 1.02. This means even without selling inventory, the business can cover all short-term debts. A supplier reviewing these ratios would likely extend favourable payment terms, and a lender would view the business as low-risk for working capital finance.
Common Current & Quick Ratio Calculator Questions
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Use Calculator →Reviewed by
BizMetrixs Team
Australian Financial Specialists