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Quick Ratio

[KWIK REY-shee-oh]

What is the definition of Quick Ratio?
A liquidity metric that measures a company's ability to cover its current liabilities with its most liquid assets, without relying on the sale of inventory.
Using Quick Ratio in an Example

To calculate the quick ratio, you would add up a company's cash, marketable securities, and accounts receivable, then divide this total by the company's current liabilities. This ratio provides insight into the company's short-term liquidity and ability to meet its immediate obligations.

Using Quick Ratio in a sentence

The CFO reviewed the quick ratio to determine if the company had sufficient liquid assets to cover short-term liabilities in the coming quarter.

Related Terms

Qualified Intermediary

A Qualified Intermediary refers to a person that acts as an intermediary qualified under certain sections of the U.S. Internal Revenue Code to undertake specified activities.
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Qualified Opinion

An audit opinion that states the financial statements are fairly presented in accordance with Generally Accepted Accounting Principles (GAAP), except for the effect of a matter to which a qualification relates, often due to a scope limitation or inability to obtain sufficient appropriate audit evidence.
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Qualitative

Relating to, measuring, or measured by the quality of something rather than its quantity.
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Qualitative Analysis

Analysis that evaluates important factors that cannot be precisely measured, focusing on the quality and characteristics of the subject matter rather than numerical data.
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Quality

The degree to which a product or service meets or exceeds customer expectations by consistently achieving desired specifications and standards.
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Quantitative Analysis

Analysis that focuses on measurable and quantifiable factors such as financial metrics, statistical data, and mathematical models, often used to predict outcomes or assess financial performance.
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Quantity

An amount or number of a specific item or category.
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Quarter

A quarter refers to one of four three-month intervals in a year, commonly used in financial and business contexts to divide the fiscal or calendar year for reporting purposes.
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Quarterly Reports

Quarterly reports, also known as interim financial statements, are financial statements issued by companies every three months to provide a periodic update on their financial health, including revenues, expenses, net profit, and cash flow, during the fiscal year.
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Quasi-Reorganization

A type of corporate restructuring in which, with shareholder approval, management revalues assets and eliminates deficit by adjusting it against other equity accounts, effectively resetting the financial structure of the company without forming a new corporate entity or requiring court intervention.
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Quick Assets

Quick assets are current assets that are either cash or can be quickly converted into cash, typically within a short period, such as cash on hand, marketable securities, and accounts receivable.
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