Quick ratio

Also called: acid test

A stricter current ratio that leaves out stock (inventory), which can be slow to sell.

Formula

Quick ratio = (Current assets − Inventory) ÷ Current liabilities

Worked example

1. Current assets − inventory = $6.0bn − $1.2bn
2. Current liabilities = $4.0bn

Result: 1.20

How to read it

Above 1 is comfortable for most businesses.

Worked example uses made-up figures for 'Example plc'

See it with real numbers: Any company page → (free account)