quick ratio


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Quick ratio

Indicator of a company's financial strength (or weakness). Calculated by taking current assets less inventories, divided by current liabilities. This ratio provides information regarding the firm's liquidity and ability to meet its obligations. Also called the Acid test ratio.

Acid-Test Ratio

A measure of a company's ability to meet its short-term obligations using its most liquid assets. It is calculated by subtracting inventories from current assets and dividing the quantity by its current liabilities. A higher acid-test ratio indicates greater short-term financial health. The acid-test ratio is more conservative than the current ratio, which measures much the same thing, because the current ratio excludes the value of inventory. This is because inventory can be less liquid than other current assets. The acid-test ratio thus measures a company's ability to meet obligations in a worst-case scenario. It is also called the quick ratio.

quick ratio

A relatively severe test of a company's liquidity and its ability to meet short-term obligations. The quick ratio is calculated by dividing all current assets with the exception of inventory by current liabilities. Inventory is excluded on the basis that it is the least liquid current asset. A relatively high quick ratio indicates conservative management and the ability to satisfy short-term obligations. Also called acid-test ratio. Compare cash ratio. See also current ratio, net quick assets.

quick ratio

see CURRENT RATIO.
References in periodicals archive ?
The car's immediate response to steering inputs -- it uses power rack-and-pinion steering with a quick ratio -- can quicken a driver's pulse during sudden maneuvers.
1997) find that the users of currency derivatives have lower quick ratio values than that of the nonusers.
Standard features on the L grade include air conditioning, 60/40 split fold-down rear seat, new, quick ratio, sport-tuned Electric Power Steering with power-assisted rack-and-pinion, power windows with driver s side auto down, three-spoke tilt steering wheel, power door locks, Daytime Running Lights, and 15-inch wheels with wheel covers.
While the quick ratio, the ratio of liquid assets due within one month should not be less than 10 per cent of total liabilities according to CBK, Markaz's rate was 26.
3 Liquidity ratio analysis index X 1 Quick ratio alarm Asset-liability ratio subsystem X Equity ratio Cash ratio Equity multiplier Operation 0.
Calculate a Quick Ratio by dividing the total CASH + Accounts Receivable by the total current liabilities.
Current Ratio (Current Assets/Current Liabilities) and Quick Ratio (Quick Assets/Current Liabilities) were then calculated for each of these years to comment on the 'liquidity' (a measure of HRF's ability to meet its current liabilities out of its Current Assets and Quick Assets respectively) trend of the fund over last five financial years.
The effects of lengthening the collection period of receivables, an act that harms company liquidity, would not be readily apparent in either the current ratio or the more conservative quick ratio.
Liquidity: May mandate minimum liquidity, such as a current or quick ratio that exceeds a certain threshold, such as 1.
As seen in Table 1, Bon Ton's quick ratio was the lowest among the five firms.
The first is the quick ratio, defined as cash plus receivables divided by current liabilities.