Quick Ratio Calculator

Updated: Jun 4, 2018

Quick Ratio Calculator evaluate a firm’s ability to cover its short-term debt with assets that can readily be transferred into cash, or quick assets

Quick Ratio:

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Background Information

What does Quick Ratio mean?: The quick ratio is also known as the acid-test ratio and is an indicator of a firm’s short-term liquidity, and measures the ability to meet its short-term obligations with its most liquid assets.

Formula

Quick Ratio = (Current Assets – Inventories) / Current Liabilities
OR
Quick Ratio = (Cash and Equivalents + Marketable Securities + Accounts Receivable) / Current Liabilities

Example

Let’s assume Carl’s Clothing Store is applying for a loan and his balance sheet displays the following:-

Cash: $10,000
Accounts Receivable: $5,000
Inventory: $5,000
Stock Investments: $1,000
Prepaid taxes: $500
Current Liabilities: $15,000
Current Liabilities: $15,000

According to the formula:-

Carl's quick ratio is 1.07

Created: Jun 4, 2018

Online Tool Designed For: Windows, OS X, Android, iOS, Linux