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


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | 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