What is the Quick Ratio?
Cfefinances
The Quick Ratio, also known as the Acid Test Ratio, is calculated as (Cash + Short-Term Investments + Net Accounts Receivable) divided by Total Current Liabilities. It measures a company's ability to meet its short-term obligations without relying on inventory sales. A ratio of 1 or higher is generally considered healthy.
Think about covering short-term bills without selling inventory. It's the same as the Acid Test Ratio — cash, short-term investments, and receivables over current liabilities.