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. A company with a quick ratio of less than 1 cannot currently fully pay back its current liabilities.

The quick ratio is similar to the current ratio, but it provides a more conservative assessment of the liquidity position of a firm as it excludes inventory,^[1] which it does not consider as sufficiently liquid.