Definition: A short-term liquidity measure calculated as quick assets divided by current liabilities. Quick assets generally include cash, readily marketable securities, and qualifying receivables, excluding inventory.
Example
Quick assets of $80,000 divided by current liabilities of $40,000 give a quick ratio of 2:1.
Keep the distinction clear
The quick ratio is more restrictive than the current ratio because it excludes assets that may take longer to turn into usable cash. Check the analysis's treatment of prepaid items and receivables.
Related terms
Liquidity · Balance Sheet · Liabilities
Keep studying
References: FREC Course II syllabus, Session 9
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