Solvency and Liquidity Ratio Calculator
This calculator returns three figures from the same inputs, because “solvency” covers more than one measure. The solvency ratio divides total assets by total liabilities, which is what tender conditions most often mean. The current ratio divides current assets by current liabilities, testing whether obligations falling due in the next year can be met. The quick ratio does the same without inventory, because stock is the slowest current asset to realise. A bidder who passes the current ratio and fails the quick one is carrying liquidity in inventory. None of the three replaces reading the condition, which frequently names a sum rather than a ratio at all. This is an estimate from figures you enter and carries no UDIN.
Solvency and Liquidity Ratios
Three measures from one set of inputs, because “solvency” covers more than one. Enter the balance sheet’s own classification of current and non-current wherever it has one — that is what the reader will use.
SUMMARY OF POSITION
| Particulars | Amount (₹) |
|---|
The bands above are orientation, not a pass mark. No universal level exists. The condition that governs you is the one written in the tender document, the court direction or the bank’s letter — and it frequently names a rupee sum rather than a ratio at all. Read it before treating any of these as a target.
Which Ratios This Calculator Returns
This calculator returns three figures from the same inputs. The first divides total assets by total liabilities, which is the form tender conditions most often mean when they use the word solvency. The second is the current ratio, dividing current assets by current liabilities, which tests whether obligations falling due in the next year can be met. The third is the quick ratio, which removes stock from the numerator because inventory is the slowest current asset to realise. Three numbers rather than one, because the word covers more than a single measure.
| Ratio | Formula | What it tests |
|---|---|---|
| Solvency ratio | Total assets ÷ total liabilities | Whether the business is solvent at all |
| Current ratio | Current assets ÷ current liabilities | Whether the next twelve months can be met |
| Quick ratio | (Current assets − inventory) ÷ current liabilities | The same, without relying on stock being sold |
What Each Ratio Signals to a Tender Committee
Each signals something different to a committee. A comfortable assets-to-liabilities ratio says the bidder is not insolvent, which is a low bar and is treated as such. The current ratio says the bidder can meet what falls due while the contract runs, which matters more for work paid in arrears. The quick ratio says the same thing without relying on stock being sold, and a bidder who passes the current ratio and fails the quick one is carrying liquidity in inventory. Committees rarely publish which they will apply, so a bidder is better placed knowing all three. None of the three is a substitute for reading the tender condition, which frequently names a sum rather than a ratio at all.
Where a Ratio Result and a Solvency Certificate Differ
A ratio result and a solvency certificate answer different questions, and this is the distinction worth taking from the tool. A ratio describes a general condition: assets against liabilities on the date the figures were drawn. A certificate answers a specific one: whether a stated sum can be met on a stated date, after anything already charged has been set aside. A bidder can present excellent ratios and still fail the certificate, because the property they were relying on is mortgaged to somebody else. The reverse also happens. A bidder with modest ratios can hold one clean unencumbered property that answers the sum comfortably, and a certificate says so where a ratio would have understated them.
Ask a CA to Certify Your Position
Asking a chartered accountant to certify the position means starting from the document that set the requirement. The sum and the date come from the tender condition, the court direction or the bank’s letter rather than from an assumption. Holdings are evidenced, charges are verified against the registry and disclosed beside the assets they burden, and the undertaking is drafted for the body that will actually read it. The certificate carries a UDIN the recipient can verify without contacting anybody. Where the condition names a recency requirement as well as a sum, that is read off the tender document the day it arrives. A certificate obtained too early is as useless as one obtained too late, and both are avoidable.
Get the position certified to your condition
Send us the tender clause, the court direction or the bank’s letter. We work backwards from the sum, the date and the recency it names, verify charges against the registry, and issue with a UDIN.
How This Tool Is Used on Our Service Pages
This calculator sits inline on the solvency certificate page, which is where a reader arrives with a tender condition in hand. That page carries what the tool does not: how charged assets are presented, what recency the condition may impose, and the difference between a bank’s solvency letter and a chartered accountant’s certificate. That distinction is one tender conditions specify and bidders routinely confuse. The solvency certificate page carries the engagement itself, including how the sum and the date are taken from the document that set them.
Adjacent to this computation. Where the condition names net worth rather than solvency, the net worth calculator and the net worth certificate page cover that measure, and a company bidding in its own name should read the company net worth calculator instead, which applies the section 2(57) definition.