logo share us

Quick Ratio

   

Definition: Quick Ratio is a model for measuring the liquidity of a company. It is calculated by taking all assets which are quickly convertible into cash, and to divide the result by all current liabilities. It specifically excludes inventory.
Also called: Acid Test Ratio.
The QR is an indicator of the extent to which a company can pay current liabilities without having to rely on the sale of inventory.
Typically, a QR of 1:1 or higher is good, and indicates a company does not have to rely on the sale of inventory to pay the bills.
Another ratio to calculate the liquidity of a firm is the Current Ratio.


   
   
💡

Learn more about Quick Ratio.



More on financial ratios: Cash Ratio, Interest Coverage Ratio, Retention Ratio.


MBA Brief offers concise, yet precise definitions of concepts, methods and models as taught in a study Master of Business Administration.

We like to keep things short, and provide links to learn more about your subject.


add us to your desktop

Add MBA Brief to your desktop / iPad

   

© 2024 MBA Brief - Last updated: 24-7-2024  -  Privacy   |   Terms