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Jun 19, 2024 · The quick ratio measures a company's ability to pay its short-term obligations with its most liquid assets. Learn how to calculate the quick ratio, its pros and cons, and its components such as cash, cash equivalents, marketable securities, and accounts receivable.
The Quick Ratio, also known as the Acid-test or Liquidity ratio, measures the ability of a business to pay its short-term liabilities by having assets that are readily convertible into cash. These assets are, namely, cash, marketable securities, and accounts receivable.
The quick ratio is a metric which measures a firm’s ability to pay its current debts without selling additional inventory or raising additional capital. It is calculated as the dollar value of a firm’s “quick” assets (cash equivalents, securities, and receivables), divided by the firm’s current debt.
May 16, 2024 · Learn how to calculate and interpret the Quick Ratio, a financial metric that measures a company's ability to cover its short-term obligations without selling inventory. Compare the Quick Ratio with the Current Ratio and find out why it matters for investors and businesses.
Quick ratio is a measure of liquidity that excludes inventories and prepayments from current assets. It shows how well a company can pay its current liabilities with its quick assets, which are cash, marketable securities, and short-term receivables.
May 17, 2021 · Quick Ratio Definition. The quick ratio (also known as the acid-test ratio) offers insight into how well a company can meet its short-term obligations. As in chemistry, an acid test provides fast results, showing how quickly a company can convert short term assets to pay short term liabilities.
Quick ratio. In finance, the quick ratio, also known as the acid-test ratio, is a liquidity ratio that measures the ability of a company to use near-cash assets (or 'quick' assets) to extinguish or retire current liabilities immediately. It is the ratio between quick assets and current liabilities. A normal liquid ratio is considered to be 1:1.
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