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

 

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History

Jun 4, 2018
Tool Launched