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Quick Ratio or acid-test ratio



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3 Performing Financial Calculations

Quick Ratio or acid-test ratio: its measure of the company’s immediate short term liquidity.

T


Quick ratio = cash + short-term investment + receivable(net)

Current liabilities


he quick ratio excludes any shares your company may have issued from the current assets, providing a more stringent view of your company's ability to meet short-term financial obligations. Calculate the quick ratio by subtracting the value of outstanding shares from current assets, and dividing the result by current liabilities. To get the value of outstanding shares, multiply the number of shares outstanding by the share price. If you are unsure of the share price, instead deduct inventories from the current assets to create an alternative measure of the quick ratio. A ratio of one or higher is considered financially healthy.


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