Quick Ratio Calculator

The quick ratio, also called the acid-test ratio, measures a company's ability to pay short-term obligations using only its most liquid assets. By excluding inventory (which may take time to sell), it provides a more conservative measure of liquidity than the current ratio.

1. 1

   Step 1

   Enter total current assets (cash, receivables, marketable securities, inventory)

2. 2

   Step 2

   Input the value of inventory separately

3. 3

   Step 3

   Enter total current liabilities (debts due within one year)

4. 4

   Step 4

   Calculator subtracts inventory from current assets

5. 5

   Step 5

   Quick ratio is computed by dividing liquid assets by current liabilities

• 1

  A quick ratio of 1.0 or higher is generally considered healthy

• 2

  Compare your quick ratio to industry benchmarks - acceptable ratios vary by sector

• 3

  Track quick ratio alongside current ratio for complete liquidity picture

• 4

  Seasonal businesses should calculate quick ratio at multiple points throughout the year

• 5

  Rapidly increasing inventory with flat quick ratio may signal sales problems

• Using Book Values Instead of Market Values

• Ignoring Receivables Quality

• Not Considering Timing

• Cross-Industry Comparisons