What Is the Quick (Acid Test) Ratio? The quick ratio is a metric that offers investors and analysts a simple look at how liquid a company is in the short term ...

The quick ratio does not include inventory, while the current ratio does, providing a less conservative, but more comprehensive, measure of a company's liquidity.

How the Quick Liquidity Ratio Works . Investors have at their disposal several different liquidity ratios to assess a company’s ability to quickly and cheaply convert whatever assets it owns ...

Liquidity ratios reveal a company's capability to cover short-term debts using available assets. Important types include the cash ratio, quick ratio, current ratio, and operating cash flow ratio ...

A company with a quick ratio of 1 or higher is typically in better financial shape than one that can't pay off its debts in a financial emergency. READ: 8 Key Investment Ratios for Stock Picking.

Whether called the quick ratio or the acid-test ratio, the result is the same: A number that tells you how many times the company can cover current liabilities with cash, cash equivalents, short ...

A quick ratio tests a company’s current liquidity and solvency. It is a measure of whether the company can pay its short-term obligations with its cash or cash-like assets on hand. (Short term ...

If your business has quick assets of $20,000 and current liabilities of $25,000 you would divide $20,000 by $25,000 to get the quick ratio of 0.8 -- indicating that you may have trouble paying off ...

They include cash and equivalents, marketable securities, ... The quick ratio can also be contrasted against the current ratio, which is equal to a company's total current assets, ...

For example, if the current ratio looks fine, but the quick ratio is low, you can figure that a company is leaning into its inventory a bit too heavily for reliable emergency cash. The Motley Fool ...

Current Ratio vs. Quick Ratio: What’s the Difference? ... Since the quick ratio doesn’t include inventory in its calculation, it may be a better liquidity indicator in some situations.