Measure a company's ability to meet its short-term obligations with its most liquid assets.
Liquid Assets & Debt
Liquidity Health
Quick Ratio1.50Good Liquidity
Liquid Assets Composition
About this calculator
Overview
Measure a company's ability to meet its short-term obligations with its most liquid assets.
💡
Pro Tips
What is the Quick Ratio?: The quick ratio, often called the 'acid-test ratio', measures a company's ability to cover its current liabilities with assets that can be converted into cash within 90 days. It excludes inventory because it can be difficult to sell quickly.
What is a 'safe' Quick Ratio?: A ratio of 1.0 or higher is generally considered healthy, as it means the company has at least $1 of liquid assets for every $1 of short-term debt.
How does it differ from the Current Ratio?: The Current Ratio includes inventory and prepaid expenses. The Quick Ratio is a more conservative and 'strict' test of liquidity.
!
Fun Facts
"The 'acid-test' name comes from the historical use of acid by gold miners to test if a metal was real gold or not."
"A quick ratio that is 'too high' might suggest that the company is not using its cash efficiently by holding too much of it."
"Service companies usually have quick ratios very similar to their current ratios because they carry little to no inventory."
