Quick Ratio Calculator
Quick Ratio
Calculate the quick ratio from quick assets and current liabilities
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From Balance Sheet
Calculate quick ratio by subtracting inventory and prepaid from current assets
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Formula
Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities | OR Quick Ratio = (Current Assets - Inventory - Prepaid) / Current Liabilities
Frequently Asked Questions
What is the quick ratio (acid test)?
The quick ratio measures a company's ability to pay current liabilities using only liquid assets (cash, marketable securities, and receivables). Unlike the current ratio, it excludes inventory and prepaid expenses because they cannot be quickly converted to cash.
What is a good quick ratio?
A quick ratio of 1.0 or higher is generally considered acceptable, meaning the company can cover short-term obligations. Above 1.5 is excellent. Below 1.0 may indicate liquidity risk. Some industries (like retail) naturally operate below 1.0.
Quick ratio vs current ratio - what is the difference?
The current ratio includes ALL current assets (including inventory). The quick ratio excludes inventory and prepaid expenses, giving a more conservative liquidity measure. The quick ratio is stricter because inventory may take time to sell.
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