Quick Ratio Calculator
Calculate the acid-test ratio from cash, marketable securities, receivables, and current liabilities. Then compare it with current ratio to see whether liquidity depends too heavily on inventory.
Quick ratio
Healthy coverage
Quick assets cover current liabilities with a practical buffer.
Enter balance sheet figures
Use end-of-period current assets and current liabilities.
Live liquidity readout
Quick ratio result
1.00x
Quick assets divided by current liabilities.
Current ratio
1.78x
Gap to 1.0
$0
$130,000
Cash, marketable securities, and receivables before inventory is counted.
0.78x
Difference between current ratio and quick ratio caused by excluded assets.
Formula from your inputs
Quick Ratio = Quick Assets / Current Liabilities
Healthy coverage
Quick assets cover current liabilities with a practical buffer.
Quick assets already cover current liabilities at the 1.0 reference point.
What Is the Quick Ratio?
The quick ratio is a stricter liquidity measure that asks whether a company can cover current liabilities with assets that are already liquid or usually collectible soon. It is also called the acid-test ratio because it removes inventory and prepaid items from the asset side of the equation.
A company can have a comfortable current ratio while still having a weak quick ratio. That happens when much of its current asset base is tied up in inventory, prepaid expenses, or other items that may not convert to cash quickly enough to pay near-term obligations.
How to Calculate Quick Ratio
Use this formula: Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities. If your balance sheet starts with total current assets, use the equivalent acid-test approach: subtract inventory and prepaid expenses before dividing by current liabilities.
The result is shown as a multiple. A quick ratio of 1.20x means the company has $1.20 of quick assets for every $1.00 of current liabilities. A quick ratio below 1.00x means quick assets do not fully cover current liabilities without relying on inventory sales, refinancing, or operating cash flow.
Formula / Assumptions
Included as quick assets
- Cash and cash equivalents
- Marketable securities
- Accounts receivable expected to be collected
Excluded from quick assets
- Inventory
- Prepaid expenses
- Other current assets that are not readily liquid
This calculator is for financial analysis and education. It does not audit receivable quality, supplier terms, credit-line availability, or industry-specific liquidity requirements.
Worked Examples
Example 1: Service company. A service business has $65,000 cash, $15,000 marketable securities, $90,000 receivables, and $120,000 current liabilities. Quick assets are $170,000, so the quick ratio is 1.42x. Inventory barely matters because the business does not depend on stock.
Example 2: Retailer. A retailer has $80,000 of quick assets and $150,000 current liabilities, but it also has $160,000 of inventory. The current ratio may look fine, yet the quick ratio is only 0.53x. This tells the owner that liquidity depends heavily on selling inventory.
Example 3: Manufacturer. A manufacturer with large receivables and inventory should track both quick ratio and current ratio. A widening spread can signal slower collections, excess stock, or a cash conversion cycle that needs attention before short-term bills come due.
Frequently Asked Questions
What is the quick ratio?
The quick ratio, also called the acid-test ratio, measures whether a business can cover current liabilities with assets that are already cash or can usually convert to cash quickly. It excludes inventory and prepaid expenses, which makes it stricter than the current ratio.
How do you calculate quick ratio?
Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities. Some analysts also write it as (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities when the balance sheet starts from total current assets.
What is a good quick ratio?
A quick ratio near or above 1.0 is often treated as a useful reference point because quick assets roughly cover current liabilities. The right target still depends on industry, receivable quality, supplier terms, credit access, and how predictable the company cash cycle is.
How is quick ratio different from current ratio?
The current ratio includes all current assets, including inventory and prepaid expenses. The quick ratio excludes assets that may take longer to turn into cash. A large gap between current ratio and quick ratio can reveal that liquidity depends heavily on selling inventory.
Should inventory be included in quick ratio?
Inventory is normally excluded because it may require discounts, time, storage, and successful sales before becoming cash. This is why the quick ratio is useful for retailers, manufacturers, and seasonal businesses that may look healthier under the current ratio.
Can a quick ratio be too high?
Yes. A very high quick ratio can mean strong liquidity, but it can also mean the business is holding idle cash or collecting receivables without reinvesting productively. Compare the ratio with trends, peers, margins, and growth needs before drawing a conclusion.
About This Calculator
Quick Ratio Calculator: compute acid-test liquidity from cash, receivables, securities, and current liabilities with examples and clear interpretation.
Frequently Asked Questions
What is the quick ratio?
The quick ratio, also called the acid-test ratio, measures whether a business can cover current liabilities with assets that are already cash or can usually convert to cash quickly. It excludes inventory and prepaid expenses, which makes it stricter than the current ratio.
How do you calculate quick ratio?
Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities. Some analysts also write it as (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities when they start from total current assets.
What is a good quick ratio?
A quick ratio near or above 1.0 is often used as a reference point because quick assets roughly cover current liabilities. The right target still depends on industry, receivable quality, supplier terms, credit access, and the company cash cycle.
How is quick ratio different from current ratio?
The current ratio includes all current assets, including inventory and prepaid expenses. The quick ratio excludes assets that may take longer to turn into cash. A large gap between current ratio and quick ratio can reveal that liquidity depends heavily on selling inventory.
Should inventory be included in quick ratio?
Inventory is normally excluded because it may require discounts, time, storage, and successful sales before becoming cash. This is why the quick ratio is useful for retailers, manufacturers, and seasonal businesses.
Can a quick ratio be too high?
Yes. A very high quick ratio can mean strong liquidity, but it can also mean the business is holding idle cash or collecting receivables without reinvesting productively. Compare the ratio with trends, peers, margins, and growth needs before drawing a conclusion.
Alex specializes in personal finance modeling with experience in investment analysis and tax optimization. He ensures every financial calculator follows current IRS guidelines and industry-standard formulas.
- CFA Level II Candidate
- B.S. in Finance, University of Michigan
- 8 years in financial planning tools