Quick Ratio Calculator

Written by:
PK

Below is a quick ratio calculator. Enter a company's cash and cash equivalents, accounts receivable, and other marketable securities, then enter current liabilities to compute the quick ratio.

(The quick ratio is used interchangeably with the acid test ratio. However, they will differ in certain situations).

Quick Ratio Calculator

What is a company's quick ratio?

The quick ratio is an aggressive liquidity ratio and check of a company's ability to pay for short-term leases and liabilities by only considering easily saleable assets such as cash and marketable securities. It also allows for accounts receivable.

The quick ratio is equivalent to the acid test ratio in GAAP accounting, which approaches the same number by netting certain assets from current assets. In certain situations in other accounting regimes, the two may differ; consider a company with hard or impossible to liquidate current assets like prepaid taxes or insurance contracts listed as current assets. For the most part, though, it's interchangeable with the acid test ratio.

Like other liquidity ratios, a ratio of 1 or above means the ratio indicates the company can meet its current liquidity needs.

Quick Ratio Formula

The quick ratio formula is:

quick\ ratio=\frac{cash\ \&\ cash\ equivalents+accounts\ receivable+marketable\ securities}{current\ liabilities}

Where:

  • Cash and Cash Equivalents – short-term assets which are as good as cash, or other names for cash (like "petty cash")
  • Accounts Receivable – cash (or equivalents) owed to the firm, listed on the balance sheet
  • Marketable securities – non-cash securities which could be quickly sold to cash in a liquidity crunch. Also listed on the balance sheet
  • Current Liabilities – short-term liabilities listed on the balance sheet

Other Liquidity Calculators

Liquidity ratios show how easily a company can meet its near term debts. See other tools:

      

PK

PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK is in his mid-30s and works and lives in the Bay Area with his wife, two kids, and dog.

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