Quick Ratio

May 05, 2021

A measure of a company’s liquidity, used to evaluate credit worthiness. Also known as the Acid Test Ratio, Quick Ratio is determined by totaling cash, short-term investments, and accounts receivable for the most recent fiscal year, and dividing by the total current liabilities for the same period. Quick Ratio does not apply to banks, insurance companies, and other companies that do not distinguish between current and long-term assets and liabilities.