Quick Ratio Calculator

Current Assets ($)

Inventory ($)

Prepaid Expenses ($)

Current Liabilities ($)

Results

Quick Ratio

Quick Assets

Rating

Analysis

Formula & Information

Quick Ratio Formula

Quick Ratio = (Current Assets - Inventory - Prepaid Expenses) ÷ Current Liabilities

Also known as the "Acid-Test Ratio," this measures a company's ability to pay short-term debts with liquid assets.

Interpretation Guide

Poor (< 0.5)

May struggle to meet short-term obligations

Fair (0.5 - 1.0)

Adequate liquidity, monitor closely

Good (≥ 1.0)

Strong ability to pay short-term debts

Key Points

Advantages

• More conservative than current ratio
• Excludes less liquid assets
• Better measure of immediate liquidity
• Useful for credit analysis

Limitations

• May be overly conservative
• Doesn't consider cash flow timing
• Industry variations exist
• Static point-in-time measurement

Example Calculation

Company ABC Financial Analysis

Current Assets: $500,000

Inventory: $150,000

Prepaid Expenses: $25,000

Current Liabilities: $300,000

Quick Assets = $500,000 - $150,000 - $25,000 = $325,000

Quick Ratio = $325,000 ÷ $300,000 = 1.08

Result: Good liquidity position

Quick Ratio Calculator