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

Why it Matters ?

Measures quick liquidity excluding inventory.

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.