What is a Quick Ratio?
The quick ratio is used to determine a company's short-term liquidity, or its ability to generate cash to cover dues over the next 90 days.
Quick Ratio = Quick Assets / Current Liabilities
Quick ratio formula
So, What is Quick Assets?
Quick assets are ones that could be turned into cash in a very short amount of time.
What are Quick Assets?
Quick Assets = Current Assets – Inventories
What are the Current liabilities?
Short-term liabilities is another name for current liabilities. These are debts that should be fulfilled within the next year.
Current Liabilities Formula
Current Liabilities = Trade Payables + Short Term Loans + Current Portion of Long Term Loans + Notes Payable + Accrued Expenses + Prepaid Revenues + Other Sort Term Debts