Quick Ratio Calculator
Calculate quick ratio (acid-test ratio)
About this calculator
The Quick Ratio Calculator helps you determine a company's ability to meet short-term obligations using its most liquid assets. Also known as the acid-test ratio, this financial metric excludes inventory from current assets, providing a more conservative measure of liquidity than the current ratio. This calculator is essential for investors, creditors, and business managers who need to assess immediate financial health and make informed decisions about creditworthiness, investment opportunities, or operational improvements.
How to use
Enter your company's current assets (cash, marketable securities, accounts receivable) and current liabilities (short-term debts due within one year). The calculator will automatically compute your quick ratio by dividing quick assets by current liabilities. A ratio above 1.0 indicates good short-term liquidity position.
Frequently asked questions
What is a good quick ratio?
A quick ratio of 1.0 or higher is generally considered healthy, indicating the company can cover current liabilities without relying on inventory sales.
How does quick ratio differ from current ratio?
Quick ratio excludes inventory and prepaid expenses from current assets, providing a more stringent test of immediate liquidity than current ratio.
Why is inventory excluded from quick ratio?
Inventory is excluded because it may take time to convert to cash and its value can be uncertain or volatile.