quick ratio
Also Called: Liquidity ratio, acid test ratio, acid test
Definition

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
[OR]
    Quick Ratio = (Total Current Assets – Inventory - Prepaid Expenses) / Current Liabilities

See Also : Ratio,
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