What is the 'Quick Ratio'?

The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets.

Sharper Insight. Smarter Investing. Manage Preferences TERM OF THE DAY Quick Ratio The quick ratio is an indicator of a company's short-term liquidity, and measures a company's ability to meet its short-term obligations with its most liquid assets. Because we're only concerned with the most liquid assets, the ratio excludes inventories from current assets. Breaking it Down: Quick assets are current assets that can be converted to cash within 90 days or... Read More Related to "Quick Ratio" Financial Analysis: Solvency vs. Liquidity Ratios Solvency and liquidity are equally important for a company's financial health. Read More Understanding Financial Liquidity Understanding how this measure works in the market can help keep your finances afloat. Read More Working Capital Position Learn how to determine a company's working capital position to correctly analyze liquidity. Read More Related Definitions Ratio Analysis A ratio analysis is a quantitative analysis of information contained in a company's financial statements. Read More Short Term Accountants define short term as current, so a current asset equals cash or an asset that will be converted into cash within a year. Read More Working Capital Management A managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets and current liabilities, in respect to each other. Read More Efficiency Ratio Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Read More You are currently subscribed as: mondemand.forex@blogger.com Unsubscribe  |  Manage Subscriptions Investopedia, LLC, A Division of IAC. 114 West 41st St, floor 8, New York NY 10036 Copyright © 2018, Investopedia, LLC. All Rights Reserved Follow Us: