Quick Ratio

quick ratio  Learning Outcomes The Quick Ratio, sometimes called the Acid Test Ratio, measures the firm's ability to pay its current liabilities with its cash and other Summary · A liquidity ratio is used to determine a company's ability to pay its short-term debt obligations · The three main liquidity ratios are the current

The quick ratio is a calculation that measures a company's ability to meet its short-term obligations with its most liquid assets  Quick ratio only uses quick assets and excludes any assets that can't be liquidated and converted into cash in 90 days or less The current ratio considers all

Due to its stricter guidelines, the quick ratio is more conservative It excludes inventory from the equation The other major difference between the two is Quick Ratio measures the ability of your organization to meet any short-term financial obligations with assets that can be quickly converted into cash