Investor Glossary - Quick RatioInsightful stock market charts - Click here

 # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z     

Quick Ratio


The quick ratio is (cash + cash equivalents + accounts receivables)/current assets. The quick ratio is a measure of the ability of a company to pay its short-term debts. Because only quick assets –- assets that will be quickly converted to cash –- are included in the quick ratio, it is a particularly conservative measure of a company's bill-paying ability. The quick ratio includes accounts receivable because they are usually converted to cash in 90 days; but the quick ratio does not include inventories, which may take as long as a year to become cash. As with all ratios, how high a quick ratio should be varies among industries, but usually a quick ratio of 1:1 or higher is considered good. In other words, a quick ratio of 100% tells creditors that the company could pay its immediate bills even if no inventory is converted to cash. Note that the quick ratio is also known as the acid test ratio.


               


Is the stock market headed lower? The answer may surprise you.
Find out now with the exclusive & highly regarded charts of Chart of the Day.


 Popular Terms : deferred revenue, forward PE, 401a, minority interest, retained earnings, deferred tax, trailing PE, average price per share, FICO score, real GDP, 144a, diluted share, wholly-owned subsidiary, net book value, cancelled check, 1031 exchange, debt service coverage, LIBOR, option premium, arm's length transaction, liquidity ratio, commodity, reverse mortgage, balance sheet, EBITDA, per diem, inflation, 1035 exchange, phantom income, Zero Cost Collar, assets under management, covered put, required rate of return, margin rate, APR, Key Rate Duration, current ratio, quant, class C shares, Russell 3000, stock, CUSIP, asset/equity ratio, Black Friday, annualize




 Rate the quick ratio definition... Receive our free Term of the Day email.
 Your Rating:
 Poor 1 2 3 4 5  Excellent
Simply type in your email address and click submit:
 Comment:   
 


Subscribe   Unsubscribe
Home | Term of the Day | Tell a Friend | Suggest a Term | Edit Subscriber Detail
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2008 Investor Glossary - All rights reserved