Solvency Ratio Calculator
This calculator works out the three liquidity and leverage ratios that lenders and advisers tend to look at first: your current ratio, quick ratio, and debt-to-equity. It is intended for Australian SME owners and their accountants who want a clear, plain-English read on solvency.
Enter your figures above to calculate each ratio. Current and quick ratios need current assets and liabilities; debt-to-equity needs total debt and equity.
How to use this tool
Take the figures straight from your most recent balance sheet. Current assets and current liabilities are the items due to convert to, or be paid in, cash within twelve months. Inventory is your stock on hand, which the quick ratio strips out because it can be slow to sell. Total debt and total equity drive the debt-to-equity ratio. Enter whatever figures you have, and the tool calculates each ratio independently, so a missing input only hides the ratios that depend on it.
| Ratio | Your Result | Benchmark | Interpretation |
|---|---|---|---|
| Current ratio | Assets ÷ liabilities | 1–2 healthy | Below 1 may struggle to meet short-term obligations; above 2 is very strong. |
| Quick ratio | (Assets − inventory) ÷ liabilities | 0.5–1 adequate | Below 0.5 signals liquidity risk; above 1 is strong. |
| Debt-to-equity | Total debt ÷ total equity | < 1 low leverage | 1–2 is moderate; above 2 is high, so monitor carefully. |
What this means for your business
Together, these three ratios show whether your business can pay what it owes, both right now and over the longer term. The current and quick ratios measure short-term survival: whether you can cover the bills due in the next year, and whether you could still do so without selling stock. A current ratio under 1, or a quick ratio under 0.5, is the kind of result that warrants action this quarter rather than next year. Debt-to-equity measures how much of the business is funded by borrowing rather than owners' capital, and the higher it climbs, the more vulnerable you are to rising interest rates or a downturn. No single ratio tells the whole story, since a strong current ratio paired with very high leverage still carries risk. Read them as a set, compare them against the benchmarks above, and watch how they move over time. A ratio drifting the wrong way month after month is a clearer signal than any single reading.
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