Category Archives: tool

What Is Your Personal Basic Liquidity Ratio?

Stable Diffusion: U.S. $100 dollar bills flowing out of a faucet, digital concept art

If you suddenly lost your source of income, how long could you afford to pay your bills and live your life as if nothing had happened?

With so many layoffs hitting tech companies in recent months, many who thought their jobs were secure are finding out otherwise. Once you lose your job, it could be many months before you find another that pays as well. Until then, there's unemployment, but chances are that won't cover all your bills until you land your next job. In the worst case, that source of temporary income could run out after you've exhausted your benefits and before you take your next job.

If you think your job could be at risk, it will be to your advantage to prepare yourself for these scenarios. One place to start is to calculate your basic liquidity ratio. In finance, analysts will calculate this ratio for companies to assess how capable they are of paying their short-term debt obligations. In personal finance, the basic liquidity ratio can be used to determine how long an individual or family could continue to meet their household expenses using their cash assets after losing their job. The higher the ratio, the longer they can sustain themselves without additional income. It’s a useful tool for planning and managing finances during uncertain times.

Cash assets refers to all the money you have in your checking, savings, or perhaps your retirement savings accounts. It can also include any things or assets you own that you can easily sell as quickly as you might need to keep paying your bills.

We've generated a new tool that will calculate your basic liquidity ratio (more on that later...), where you can enter the value of your total monetary assets and your total monthly expenses. It will determine your liquidity ratio, which in this context, will directly correspond to how many months you can keep paying your bills and living your life as if you hadn't lost your source of income. If you're accessing this article on a site that republishes our RSS news feed, you may need to click through to our site to access a working version.

Total Monetary Assets:
Monthly Expenses:
Liquidity Ratio:

For the default scenario, with $6,000 in total monetary assets matched against monthly expenses of $4,800, the basic liquidity ratio works out to be 1.25. A household with these assets and expenses would last 1.25 months (or about 5 weeks) before running out of money. For this context, the higher the ratio, the more time you have to find your next job.

If you want to find out how unemployment benefits might affect the results, you have two alternatives to simulate them. You can either estimate your monthly unemployment benefits and subtract it from your Monthly Expenses or you can calculate the maximum benefit you may receive before it runs out and add it to your Total Monetary Assets. Unfortunately, and for obvious reasons, you cannot do both!...

About the Code

We had Microsoft Bing's AI-powered chat generate the code used in the tool featured in this post. It took about 30 seconds, here's the prompt and the code it created for us.

Generate the javascript code, including html tables, for a calculator that solves for the basic liquidity ratio given both total monetary assets and monthly expenses.

Sure! Here’s a simple JavaScript code that you can use to create an HTML table for a calculator that solves for the basic liquidity ratio given both total monetary assets and monthly expenses:

function calculateLiquidityRatio() {
   var totalMonetaryAssets = document.getElementById("totalMonetaryAssets").value;
   var monthlyExpenses = document.getElementById("monthlyExpenses").value;
   var liquidityRatio = totalMonetaryAssets / monthlyExpenses;
   document.getElementById("liquidityRatio").innerHTML = liquidityRatio;

     <td>Total Monetary Assets:</td>
     <td><input type="number" id="totalMonetaryAssets"></td>
     <td>Monthly Expenses:</td>
     <td><input type="number" id="monthlyExpenses"</td>
     <td>Liquidity Ratio:</td>
     <td id="liquidityRatio"></td>
<button onclick="calculateLiquidityRatio()">Calculate</button>

This code creates an HTML table with input fields for total monetary assets and monthly expenses, and a button to calculate the liquidity ratio. When the button is clicked, the calculateLiquidityRatio function is called, which calculates the liquidity ratio and displays it in the table.

Is this what you were looking for?

It was 95% of what we needed. Most impressively, we didn't even have to provide the mathematical formula for the ratio; it found it on its own. We did have to add some additional coding so you can run it, but we view that as comparatively trivial.

Image credit: Stable Diffusion DreamStudio Beta: "U.S. $100 dollar bills flowing out of a faucet, digital concept art".

Tax Day 2023: The Original IRS Form 1040

Stable Diffusion DreamStudio Beta: A greedy Uncle Sam wants to make Americans pay taxes

U.S. Income Tax Day arrives on April 18 in 2023. And what better way could there be to celebrate the most dreaded day on the American calendar than by filling out another income tax form?

Before you start pounding the "back" button, there's nothing for you to worry about! You won't have to pay any more income taxes than what you already have reported on whichever version of IRS Form 1040 you're filing this year. Instead, we've built the following tool to transport you in time back to 1913, where our tool will estimate how much your federal income taxes would be if that year's income tax rules still applied.

Why 1913? That's the year the Internal Revenue Service first issued its infamous Form 1040. We've modeled our tool after the first page of the original Form 1040, which back then, consisted of just four pages:

  • The summary sheet modeled below (Page 1),
  • the Gross Income calculation sheet (Page 2),
  • the General Deductions sheet (Page 3), and finally,
  • one page of Instructions (Page 4).

Yes, you read that right. Paying U.S. income taxes used to only require one page of instructions!

We'll make it even easier. All you need to do is to enter the indicated data (shown in boldface type, in the rows with a white background), using your figures from this year that should still be very fresh in your memory, and we'll take care of the math! The tool will display its calculated results in the rows with a gray background, where you won't have to worry about entering any values.

If you are accessing this article on a site that republishes our RSS news feed, please click here to access a working version of the tool on our site. Now, if you're ready, let's get to it!...

IRS Form 1040, Circa 1913
Return of Net Income Received or Accrued During the Year Ended December 31, 191_
1. Gross Income (see page 2, line 12)
2. General Deductions (see page 3, line 7)
3. Net Income  
Deductions and exemptions allowed in computing income subject to the normal tax of 1 per cent.
4. Dividends and net earnings received or accrued, of corporations, etc., subject to like tax. (See page 2, line 11)
5. Amount of income on which the normal tax has been deducted and withheld at the source. (See page 2, line 9, column A)
6. Specific exemption of $3000 or $4000, as the case may be. (See Instructions 3 and 19)
Total deductions and exemptions (Items 4, 5, and 6)
7. Taxable Income on which the normal tax of 1 per cent is to be calculated. (See Instruction 3)
8. When the net income shown above on line 3 exceeds $20,000, the additional tax thereon must be calculated as per schedule below:
1 per cent on amount over $20,000 and not exceeding $50,000
2 per cent on amount over $50,000 and not exceeding $75,000
3 per cent on amount over $75,000 and not exceeding $100,000
4 per cent on amount over $100,000 and not exceeding $250,000
5 per cent on amount over $250,000 and not exceeding $500,000
6 per cent on amount over $500,000
Total additional or super tax
Total normal tax (1 per cent of amount entered on line 7)
Total tax liability
Original IRS Form 1040

Here are several excerpts from the instructions for filling out the original IRS Form 1040, which explain some of the math our tool is doing.

Excerpts from the Instructions

3. The normal tax of 1 per cent shall be assessed on the total net income less the specific exemption of $3,000 or $4,000 as the case may be. (For the year 1913, the specific exemption allowable is $2,500, or $3,333.33, as the case may be.) If, however, the normal tax has been deducted and withheld on any part of the income at the source, or if any part of the income is received as dividends upon the stock or from the net earnings of any corporation, etc., which is taxable upon its net income, such income shall be deducted from the individual's total net income for the purpose of calculating the amount of income on which the individual is liable for the normal tax of 1 per cent by virtue of this return.

19. An unmarried individual or a married individual not living with wife or husband shall be allowed an exemption of $3,000. When husband and wife live together they shall be allowed jointly a total exemption of only $4,000 on their aggregate income. They may make a joint return, both subscribing thereto, or if they have separate incomes, they may make separate returns; but in no case shall they jointly claim more than $4,000 exemption on their aggregate income.

Previously on Political Calculations

Haven't had enough taxes yet? Here's a couple of other tools that might be of interest to you!

Image credit: Stable Diffusion DreamStudio Beta: "A greedy Uncle Sam wants to make Americans pay taxes".

How Much Change Can You Have Without Having Exactly One Dollar in Coins?

U.S. Mint: Coins in Circulation

Ready for a seemingly simple riddle? What is the maximum value of U.S. coins you can have without being able to make exact change for one dollar?

Before you answer, a word of warning! According to the experts at Puzzling, there's no clever formula you can use to directly solve this problem. Instead, you have to more-or-less slog your way through it in a brute force-like process of trial and error! [Warning: Puzzling also provides the solution in their discussion. Click through if and when you're ready for it, but you may want to hold off until you've finished here first!...]

Fortunately, we can help automate that process! We've built the following tool to help you work through any solution you might like to try. Just enter the number of coins for each type and our tool will tally up their total value and help guide you toward a valid solution! If you're reading this article on a site that republishes our RSS news feed, please click through to our site to access a working version of the tool.

Combination of Coins
Input Data Values
Number of Half-Dollars
Number of Quarters
Number of Dimes
Number of Nickels
Number of Pennies

Combined Value of Coins
Calculated Results Values
Total Value of Coins
The Bottom Line

If you need a hint for how to find the solution, read on! You are looking for the highest value of a combination of coins that, if you were to add just one more coin of any type into the mix, whether it be a penny, nickel, dime, quarter, or half-dollar, you would be able to produce exact change for a U.S. dollar bill. Whether that's possible with more or less than $1.00 in coins is something you will discover!

In this tool, we've omitted the one-dollar coin as an option because, by definition, this coin alone is exact change for a dollar, so having one would automatically wreck your chances of discovering the solution. Plus, despite the U.S. Mint's claims of one dollar coins being in circulation, in practice, these coins are so incredibly unpopular with the American public, they might as well not be.

Good luck!

Image Source: U.S. Mint.

Gross and Net Profits

Woman reading Profit First - Photo by Natasha Hall via Unsplash:

Investors have made Apple (NASDAQ: AAPL) worth more than $2 trillion dollars. But how profitable is the company?

That depends on how you measure profit. If you want a raw number, calculating a company's gross income is a good place to start. That's just the difference between its total sales and its total cost of goods sold, ignoring its other costs of doing business. This figure is useful for comparing the basic profitability of a company's core business with that of other companies like it. It's also useful if you track it over time. If you see a company's gross profit swinging wildly from one period to the next, that can be a sign its core business is either highly volatile or, in the worst case, is not well managed. Which if you're going to invest in the company, is probably something you ought to know.

As an investor however, that's not enough information to tell you how profitable the company really is. For that, you need to take its operating costs, how much it pays in interest expenses, how much it pays in taxes, and its other income and expenses into account. Doing that will tell you the company's net income (sometimes called its net earnings), which is the real bottom line. A company with positive net income is making money and a company with negative net earnings is losing money.

For comparing companies, you will find its useful to standardize these measures of profitability by dividing each by the company's total sales revenue and expressing the result as a percentage. For gross income, the result of that math is called the gross profit margin and for net income, the result is called the net profit margin. These percentages will let you directly compare the profitability of companies with very different amounts of profit. And of course, will let you assess trends in a single company's profitability performance if you follow it over time.

All that said, we've built a tool to make it easy for anyone to do this math. All you need is the business' income statement. In the tool below, the default data comes from Apple's December 2022 10-K SEC filing [also available in PDF format], so the tool's results will tell you just how profitable Apple was at the end of 2022. If you're reading this article on a site that republishes our RSS news feed, please click through to our site to access a working version of the tool.

Income Statement Data
Input Data Revenues Expenses
Total Net Sales  
Total Cost of Sales  
Total Operating Expenses  
Interest Expenses  
Income Taxes  

Gross and Net Profits
Calculated Results Income Profit Margin

Of course, you're more than welcome to substitute the financial data for other companies in the tool to assess their profitability.

We've made a point of the importance of tracking a company's gross and net profit margins over time, so to that end, we'd like to point you to a very useful resource. Macrotrends features an online application that will chart a company's gross, operating and net profit margins over its recent history using information from its database. Follow this link to see where they've done that for Apple's profit margins going back to December 2009.

Image Credit: Photo by Natasha Hall on Unsplash. The book being read in the photo is Profit First by Mike Michalowicz, which has the enchanting subtitle "Transform Your Business from a Cash-Eating Monster to a Money-Making Machine". At this writing, the book has 7,091 reviews on Amazon, with 85% giving it five stars. Goodreads gives it a 4.27 rating, 51% of which are five star reviews. Most of the critical reviews point out the whole concept of the book could be summarized in five pages or less. Or perhaps just one blog post, but that's a challenge for another day.

Your Paycheck in 2023

Welcome to 2023! Since you've clicked through to this tool, we know you're here to estimate what your take home pay will look like after all those federal income and payroll taxes have been taken out of your paycheck. But first, since it's now in the public domain, here's what 1927 vintage cartoon characters Mutt and Jeff discovered to be the secret of success while working as income tax "experts".

Mutt and Jeff: As Income Tax Experts They Discover the Secret of Success, Douglas Daily Dispatch, 11 March 1927, via Library of Congress

Who knew?! But as anyone who has earned an income without offsetting losses and has paid income taxes knows, what Uncle Sam takes out of your paycheck can be pretty substantial.

How substantial can be affected by several factors. For instance, how much did you invest toward your retirement in a pre-tax 401(k) retirement account at work? Does your employer offer health or dependent care pre-tax flexible spending accounts that you might use this year? Did you get a raise to cope with President Biden's inflation?

Our 2023 paycheck tool can help you find out how the answers to these questions can affect your paycheck and more! If you're reading this article on a site that republishes our RSS news feed, please click through to our site to access a working version of the tool. Otherwise, you're more than welcome to enter whatever numbers you want to consider for what your paychecks might look like in 2023. It all starts... now!

Your Paycheck and Tax Withholding Data
Category Input Data Values
Basic Pay Data Current Annual Pay
Pay Period
Federal Withholding Data Filing Status
Have you filed a new IRS Form W-4 with your employer since 2019?
Number of Withholding Allowances (from your pre-2020 IRS Form W-4 if you haven't)
Extra Tax to Withhold per Paycheck (as requested on your IRS Form W-4)
401(k) or 403(b) Contributions Pre-Tax Contributions (%)
After Tax Contributions (%)
Flexible Spending Account Annual Contribution Data Health Care Spending Account
Dependent Care Spending Account
What if You Had a Raise? Desired Raise (%)

Your "Typical" Paycheck Data
Category Calculated Results Values
Basic Income Data Proposed Annual Salary (Including Raise!)
Typical Paycheck Amount
Federal Tax Withholding Amounts U.S. Federal Income Taxes
U.S. Social Security Taxes
U.S. Medicare Taxes
U.S. Additional "Medicare" Taxes (If Applicable)
401(k) or 403(b) Contributions Pre-Tax Contributions
After-Tax Contributions
Total Contributions
Flexible Spending Account Contributions Health Care Spending Account
Dependent Care Spending Account
Your Paycheck's Bottom Line
Take Home Pay Estimate Basic Net Paycheck Amount
... But, After Social Security's Taxable Income Cap Is Reached, It Becomes (If Applicable, for a Full Paycheck)
... And Then, After Additional Medicare Tax Income Threshold Is Reached, It Becomes (If Applicable, for a Full Paycheck)

The tool's results convey how much money the IRS withholds for federal taxes from each of your paychecks in 2023. There are however a number of factors that will complicate your withholding tax results based upon how much you cumulatively earn during the year.

For example, once your cumulative income reaches $160,200 or higher, you will no longer have Social Security's payroll tax of 6.2% of your income deducted from your paycheck (if you're self-employed, that payroll tax is 12.4%). The tool above is designed to provide withholding tax estimates for the majority of Americans who are employed by others. People making this amount of money don't really get a break however, because they've already been pushed into a higher tax bracket, paying higher regular income tax rates than those paid by over half of all income-earning American households.

There's also the complication provided by the so-called "Additional Medicare Tax" that your employer is required to begin withholding from your paycheck if, and as soon as, your year-to-date income rises above the $200,000 mark. This surtax of 0.9% of gross income was imposed by the "Affordable Care Act" (a.k.a. "Obamacare") in 2010, which is still in effect. Since the money collected through this surtax does not directly support the Medicare program, unlike the real Medicare payroll taxes paid by you and your employer, it is really best thought of as an additional income tax. That additional income tax is not adjusted for inflation, which means that those who must pay it are subject to 1970s-style income tax bracket creep, even though the tax was sold on the claim that it would be limited to only very high income earners.

In the tool above, when the amount of your annual 401(k) or 403(b) retirement savings contributions exceed the annual limits set by law, we've limited the results our tool provides to be those consistent with their statutory limits, and will do so as if you specifically set the percentage contributions for these contributions with that in mind. Our tool does not consider whether you might take advantage of the "catch-up" provisions in the law that are available to individuals Age 50 or older, which increase those annual contribution limits by as much as $7,500 in 2023.

Elsewhere on the Web

There are other salary and hourly paycheck calculators like this on the Internet, including the very well done tools available at PaycheckCity's State Salary Paycheck Calculators allow you to determine the amount of state income tax withholding that will be taken out of your paycheck in addition to what the federal government will take out. Payroll processing giant ADP also has a salary paycheck calculator that will give you good results. Overall, we find the format of PaycheckCity's calculators to be more user friendly, but ADP's version has the benefit of having an all-in-one user interface.

If however you live in one of the nine states that have no personal income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, or Wyoming), our tool above will provide you with a very good estimate of your actual take-home pay after Uncle Sam has left his greasy fingerprints all over it.

Previously on Political Calculations

We've been in the business of calculating people's paychecks (not including state income tax withholding) since 2005!