What is quick ratio?

Modified on Mon, 18 Jun 2018 at 12:31 PM

The quick ratio is an indicator of a company’s short-term liquidity, and measures a company’s ability to meet its short-term obligations with its most liquid assets. Because we're only concerned with the most liquid assets, the ratio excludes inventories from current assets. Quick ratio is calculated as follows:

Quick ratio = (current assets – inventories) / current liabilities, or

Quick ratio = (cash and equivalents + marketable securities + accounts receivable) / current liabilities

The quick ratio is also known as the acid-test ratio.


Source : Investopedia


Was this article helpful?

That’s Great!

Thank you for your feedback

Sorry! We couldn't be helpful

Thank you for your feedback

Let us know how can we improve this article!

Select atleast one of the reasons
CAPTCHA verification is required.

Feedback sent

We appreciate your effort and will try to fix the article