How do you figure out the excess of the current assets of a business over its current liabilities?

(This answer applies to the United States)

According to "Generally Accepted Accounting Procedures" (GAAP) and US Laws and Regulations, a publicly held corporation (one which offers shares for sale to the public and is traded on a stock exchange such as NASDAQ or the New York Stock Exchange) must publish financial statements quarterly which include a statement of their total "Current Assets" and total "Current Liabilities" stated in dollars.

Summaries of these statements may be found on such websites as Yahoo Finance (Yahoo.com">http://finance.Yahoo.com). By entering the "ticker symbol" in the quote box (or starting to type the name of the corporation) you can reach a page where you find a link to their financial statements. There you will find totals for Current Liabilities and Current Assets.

The "excess" in question, then, may be determined by simply subtracting the Current Liabilities from the Current Assets. For a corporation in good financial health, this number should certainly be positive, and in fact is often considered to be good only if it is about equal to the Current Liabilities taken by themselves. That condition would mean that the corporation has a "current ratio" (Current Liabilities divided by Current Assets) of 2, by the same token considered a "good" number.

The optimal current ratio will vary with the type of business however, and a lower ratio might be acceptable in some cases. A very large current ratio suggests the business, while very solvent, may not be managing its cash well. A current ratio of less than one (and therefore a negative "excess") is technically insolvent (in a short time horizon) a Very Bad thing. ("Insolvent" means they can't pay their bills on demand, and could be forced into bankruptcy.)

(Note that a privately held company may not be required to publish these numbers.)