Quick ratio (acid test)
Quick assets divided by current liabilities: a liquidity ratio using cash, cash equivalents, liquid short-term investments and net receivables. Inventory, prepayments and other non-quick assets are excluded.
Quick ratio (acid test) in round numbers
Hypothetical US$ millions at one balance-sheet date: current assets are 16.8, including inventory of 4.7. Assume the other 12.1 consists entirely of quick assets, including receivables net of any allowance. With current liabilities of 7.8, the quick ratio is 12.1 ÷ 7.8 ≈ 1.55.
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| Measure | Value |
|---|---|
| Current assets | 16.8 |
| Inventory, the only non-quick asset assumed | 4.7 |
| Quick assets | 12.1 |
| Current liabilities | 7.8 |
| Quick ratio | 1.55 |
Terms Related to Quick ratio (acid test)
Working capital · Inventory · Working-capital days · All of the glossary