Assess your company's immediate financial health with this essential liquidity tool. Calculate your quick ratio (acid-test ratio) to:
- Measure ability to pay short-term obligations without selling inventory
- Evaluate financial stability and liquidity risk
- Compare against industry benchmarks
- Make informed decisions about working capital management
Perfect for business owners, financial analysts, accountants, and investors who need to evaluate a company's short-term financial position.
🔹 Accurate Quick Ratio Calculation
🔹 Clear Interpretation of Results
🔹 Comprehensive Financial Education
🔹 Professional Design & Easy to Use
🔹 Mobile-Responsive Interface
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Quick Ratio Calculator
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Quick Ratio (Acid-Test Ratio):
Understanding the Quick Ratio
The quick ratio (or acid-test ratio) measures a company's ability to meet its short-term obligations with its most liquid assets. Unlike the current ratio, it excludes inventory from current assets, providing a more conservative view of liquidity.
How to Calculate the Quick Ratio
The quick ratio is calculated by dividing liquid assets by current liabilities:
Where:
- Cash: Physical currency and bank deposits
- Marketable Securities: Short-term investments that can be quickly converted to cash
- Accounts Receivable: Money owed by customers
- Current Liabilities: Debts and obligations due within one year
Interpreting the Quick Ratio
- Above 1.0: The company has more liquid assets than short-term liabilities (good financial health)
- 1.0: Liquid assets exactly cover short-term liabilities
- Below 1.0: The company may struggle to meet short-term obligations without selling inventory or raising capital
- Industry norms vary: Some industries normally operate with lower quick ratios
Important Notes
- The quick ratio is more conservative than the current ratio as it excludes inventory
- Compare to industry averages for meaningful analysis
- Trend analysis (comparing over time) is often more valuable than a single calculation
- Very high ratios may indicate inefficient use of liquid assets
- Should be used alongside other financial metrics for complete analysis
