Accounting
Intermediate

Quick Ratio

Stringent liquidity measure excluding inventory.

Formula

QR=CurrentAssets−InventoryCurrentLiabilitiesQR = \frac{Current Assets - Inventory}{Current Liabilities}

Variables

Assets,LiabilitiesCurrent
InventoryStock

Example

Acid-test ratio

Did You Know?

The quick ratio strips out inventory to test whether a firm can pay bills using only its most liquid assets.

liquidity