Quick Ratio

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Quick Ratio Formula

The Quick Ratio is used for determining a company's ability to cover its short term debt with assets that can readily be transferred into cash, or quick assets. The Current Liabilities portion references liabilities that are payable within one year.

The Quick Ratio provides an idea of how solvent a company is without requiring sales to cover the short debt, which differentiates it from the current ratio. The quick ratio can also be written as

Quick Ratio Alternative Formula

Current Assets are assets that can be realized within one year. Inventory, which is included in the current ratio, is excluded in the quick ratio.

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