Quick Ratio (Acid Test) Calculator
Measures a company's ability to pay short-term obligations with liquid assets only
Cash + accounts receivable + short-term investments
Quick assets divided by current liabilities
Assessment of short-term liquidity position
Frequently Asked Questions
What is the quick ratio?
The quick ratio (acid test) measures a company's ability to meet short-term obligations using only its most liquid assets: cash, accounts receivable, and short-term investments. Unlike the current ratio, it excludes inventory which may be hard to convert to cash quickly.
What is a good quick ratio?
A quick ratio of 1.0 or above means the company can cover all current liabilities with liquid assets. Below 1.0 may indicate liquidity problems. However, some industries (like retail) operate normally with lower quick ratios due to fast inventory turnover.
How is the quick ratio different from the current ratio?
The current ratio includes all current assets (including inventory and prepaid expenses). The quick ratio excludes these less-liquid assets. The quick ratio is a more conservative measure of short-term financial health.
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