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Enter the lines of your balance sheet and see the three ratios a tender committee or a lender works out from them: assets to liabilities, the current ratio and the quick ratio, each with its formula and the figures behind it. The check a bidder or borrower makes before asking a chartered accountant to certify the position.
Written by Subham Jhunjhunwala · Reviewed by CA Sundram Gupta ·
Your ratios as on today
From the balance sheet you entered: total assets ₹0 against total liabilities ₹0.
Total assets less total liabilities, both at book value as entered. The figure a condition means when it names a net worth sum rather than a ratio.
After the result
A tender committee, a court or a bank does not act on the ratios you work out here. It acts on a certificate that answers the question its own document asked.
Where the condition names a sum and a date, the document that answers it is a solvency certificate issued by a chartered accountant: the position as on the date the condition sets, written to the recipient that will read it, and signed with a UDIN that recipient can check on the ICAI portal. Your ratios are the check you make before that work starts, not a substitute for it.
Calculate your ratios first. The button to talk to a CA appears with your result.
Three measures from one balance sheet
"Solvency" covers more than one measure, so the page returns three from the same inputs. Each is a plain division of the totals you entered, rounded to two decimals, and the result prints the figures that went into it.
Total assets÷Total liabilities
Every asset line, current and non-current, over every liability line, current and non-current. Above 1, the business owns more than it owes in total; below 1, it does not. This is the form most tender conditions mean when they say solvency.
From the sheet: both sides, all four groups.Current assets÷Current liabilities
To calculate the current ratio, add inventory, receivables, cash and bank, short-term investments and other current assets, then divide by trade payables, short-term borrowings and other current liabilities. It asks whether what falls due soon can be met from what turns into cash soon.
From the sheet: the current group on each side.Current assets − inventory÷Current liabilities
The current ratio again, with stock taken out of the top line, because inventory is the slowest current asset to turn into cash. The gap between the two ratios is the share of your liquidity that sits in stock.
From the sheet: the current group on each side, less the inventory line.Type the same lines into the sheet above and the result matches. The example is an illustration, not anyone's balance sheet.
Assets
Liabilities
What the page returns
Reading the result
Each of the three answers a different question. Knowing all three puts you ahead of a committee that rarely says in advance which one it will apply.
"Is this business solvent at all?"
Above 1 means the assets, taken together at book value, cover the liabilities taken together. It is a low bar and a committee treats it as one: it says nothing about when the assets can be turned into cash or when the liabilities fall due. A fixed-asset-heavy contractor can clear it comfortably and still be short of cash next quarter.
"Can it meet what falls due while the contract runs?"
This is the one that matters most for work paid in arrears. Wages, suppliers and the working-capital bank are paid before the running bill is cleared, and the current ratio shows whether the assets that turn into cash in that period cover the dues that fall in it. A lender reads it the same way for a working-capital limit.
"The same, without counting on the stock being sold?"
A bidder that passes the current ratio and fails the quick ratio is carrying its liquidity in inventory. That is fine for a trader whose stock turns fast and a worry for a contractor holding unsold material. The result flags the gap for you when the current ratio clears 1 only because of stock.
No universal level exists, and this page prints none. The level that governs you is the one written in the tender document, the court direction or the bank's letter, and many conditions name a rupee sum rather than a ratio at all. Copy that figure into the sheet and the result is read against it, labelled as yours.
Two different questions
A ratio describes a general condition: assets against liabilities on the date the figures were drawn. A certificate answers a specific question put by a specific reader. This is the distinction worth taking from the tool.
A bidder can show an assets-to-liabilities ratio well above 1 and still not get the certificate for the sum named, because the property the ratio leaned on is mortgaged to a lender and is set aside before the sum is tested.
The reverse also happens. A bidder with ordinary ratios can hold one unencumbered property that answers the sum comfortably, and the certificate says so where a ratio would have understated the position.
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