Quick Ratio

RECENT NEWS
The Hindu Business Line  May 24  Comment 
Will the corporate-style 360-degree feedback tool work in evaluating civil servants?
The Hindu Business Line  Feb 9  Comment 
Governor needs to play it fair, and play it right
The Economic Times  Jan 4  Comment 
The distress that demonetisation caused to the citizenry and the pain it spread across different sectors have left a bitter taste, which may not go away too soon.
The Times of India  Nov 18  Comment 
What complicates matters is that the Mistry clan's Shapoorji Pallonji group has an 18.4% stake in the holding company, two-thirds of which is owned by the Tata Trusts, controlled by Ratan Tata.
The Economic Times  Nov 17  Comment 
What complicates matters is that the Mistry clan's Shapoorji Pallonji group has an 18.4% stake in the holding company, two-thirds of which is owned by the Tata Trusts, controlled by Ratan Tata.
The Hindu Business Line  Sep 29  Comment 
Country’s OEMs must do their bit to promote new energy vehicles
Forbes  Sep 1  Comment 
Retail has only one rule: Don't outrun the bear, just the other guy. And Amazon is the bear.
The Hindu Business Line  Feb 2  Comment 
Elections to local bodies in States are normally routine. Not so, for the polls to the Greater Hyderabad Municipal Corporation (GHMC), held on Tuesday. The reasons – they are the first after the forma...




RELATED WIKI ARTICLES
 
TOP CONTRIBUTORS

Quick Ratio is the sum of cash, marketable securities and receivables, divided by current liabilities.

The Quick Ratio, also known as the acid test ratio, is the measure of a company's short-term liquidity. A higher quick ratio indicates better liquidity -- that is, a better ability to meet short-term obligations -- and vice versa. The general formula for quick ratio is


Quick Ratio = (Cash + Marketable Securities + Receivables) ÷ (Current Liabilities)


In essence, the quick ratio, is a conservative version of the current ratio as it only includes the most liquid of the current assets: cash, marketable securities and receivables. The ratio takes into account the fact that certain current assets -- such as pre-paid expenses, taxes -- have already been paid in advance and cannot be converted back into cash. It also discounts inventory as it cannot be easily converted into cash, and that a company may not be able to realize the full carrying value of the inventory if it were to sell it quickly.

Example

  • Company A has $100 million in Current Assets and $50 million in Current Liabilities. The current assets include $10 million in receivables, $5 million in cash and $10 million in short-term marketable securities. Therefore, the company's quick ratio would be 0.5 ((10+5+10)/50).
Please install Flash Player to view this chart.
Please install Flash Player to view this chart.
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki