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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- 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
History
- Jun 4, 2018
- Tool Launched
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