Quick Ratio

The Quick Ratio is a liquidity risk KPI that measures the ability of a company to meet its short-term obligations by converting quick assets into cash. The Quick Ratio is also known as the acid test ratio because it’s used to measure the financial strength of a business. It reflects the organization’s ability to generate cash quickly to cover its debts if it experiences cash flow problems. Companies often aim for a Quick Ratio that’s greater than one.

📘

Formula

Quick Ratio = Quick Assets / Current Liabilities


Did this page help you?