# 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 ?
Figure 2 shows that only minor differences in the quick ratio are evident when comparing foreign-based companies against the same ratios developed using US GAAP.
Some of the more commonly used in the industry include the current ratio, or those assets (liquid and illiquid) relative to the company's current total liabilities, and the acid-test or quick ratio, which measures the ability of a company to use its near cash to retire current liabilities, but unlike the current ratio ignores illiquid assets.
Quick Ratio : Current Assets - (Inventory + Prepaid Expenses) / Current Liabilities
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.
Quick ratio points out a corporation's capacity to pay off its short-term liabilities with its most liquid assets, and therefore inventories are precluded from its current assets.
The fourth considered indicator is quick ratio (see table 4).
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.
Further to determine the relationship between the company size, sales growth, debt ratio, quick ratio, current ratio, and operating cash flow and its impact on the profitability in fuel and energy sector of Pakistan.
The main indicators of liquidity in the static sense are the current ratio (CR) and the quick ratio (QR), which does not take into account inventories (I).

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