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Quick Ratio
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Quick Ratio (Acid Test) = (Cash + Marketable securities + Receivables)/Current Liabilities.
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The Quick ratio is designed to show how many times readily liquidated assets cover current liabilities.
Example:
If cash = 24,345
Receivables = 355,000
Current liabilities = 275,000
Quick Ratio = 379,345/275,000 = 1.38 times.
Quick Ratio usually includes receivables but excludes inventories as being more difficult to liquidate. This is not always a watertight approach to take.
Some businesses can liquidate inventories very quickly, and some businesses may have difficult receivable collection situations.
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Software Links
Ratios With Excel
Reference Pages
Current Ratio
Receivable Ratio
Payables Ratio
DuPont Ratios
US Benchmark Ratios 2003
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