# Quick Ratio Calculator

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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