Quick Ratio Calculator
Calculate the quick ratio (acid-test ratio) to measure company liquidity. Quick Ratio = (Current Assets - Inventory) / Current Liabilities.
Formula
Quick Ratio = (Current Assets - Inventory) / Current Liabilities
- Quick assets = Current Assets minus Inventory (excludes less liquid assets)
- More conservative than Current Ratio (which includes inventory)
- Benchmark: 1.0 or higher indicates good short-term liquidity
- Used by creditors and analysts for financial health assessment
Example
Inputs
- Current Assets: 100000
- Inventory: 30000
- Current Liabilities: 50000
Current Assets 100k, Inventory 30k, Liabilities 50k: Quick Ratio = (100k - 30k) / 50k = 1.4 (strong liquidity).
Frequently asked questions
Why exclude inventory?
Inventory takes time to sell. Quick ratio only counts readily convertible assets (cash, receivables).
Is 1.0 always good?
Generally yes for most industries. Industry and company size matter. Check comparable companies.