Investor Glossary-quick ratioInvestor Glossary-quick ratioInvestor Glossary-quick ratioInvestor Glossary-quick ratioInsightful stock market charts - Click here
investor
Categories    # 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 HTML to link to this page
 

The quick ratio is (cash + cash equivalents + accounts receivable) / current liabilities. The quick ratio is a measure of the ability of a company to pay its short-term debts. 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. Indeed, the quick ratio, unlike the current ratio, only includes assets that can be quickly converted. As a result, the quick ratio is a particularly conservative measure of a company's bill-paying ability. 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.



Rate this quick ratio definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: Key Rate Duration, EBITDA, phantom income, debt service coverage, inflation, liquidity ratio, wholly-owned subsidiary, limit order, Zero Cost Collar, FTSE, LIBOR, required rate of return, covered put, 401a, class C shares, diluted share, annual return, APR, stock market close, VIX, current ratio, labor relations, 144a, ex-dividend date, 1035 exchange, cancelled check, per diem, implied volatility, real GDP, minority interest, margin rate, command economy, ex-dividend, quality assurance, irrevocable trust, risk management, in escrow, reverse mortgage, retained earnings, deferred tax, dividends payable, average price per share, option premium, balance sheet, open position, 1031 exchange, stock split, FICO score, deferred revenue


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use