Also Called: Liquidity ratio, acid test ratio, acid test
plural: quick ratios
Quick ratio is a financial ratio used to measure a company's liquidity. It measures the ability of a business to pay its short-term liabilities(debts).
It can be calculated as follows:
Quick Ratio = (Cash & Equivalents + Marketable Securities + Accounts Receivable) / Current Liabilities
Quick Ratio = (Total Current Assets – Inventory - Prepaid Expenses) / Current Liabilities