Measures a company’s ability to cover its short-term liabilities with its most liquid assets.
What it Measures ?
Can we pay our dues quickly without selling inventory?
Relevant StakeHolders
CFO, Finance Analyst
In-depth Use Case / Real-world Example
Quick Ratio, or acid-test ratio, is calculated by subtracting inventory from current assets and dividing by current liabilities. For example, if a company has ₹500,000 in current assets, ₹200,000 in inventory, and ₹300,000 in current liabilities, the quick ratio is 1.0. It’s a more stringent test of liquidity, focusing on assets that can be quickly converted into cash.
KPI Definition
Business Value
Movement Direction
Sample Formula
(Current Assets - Inventory) / Current Liabilities
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