What is Quick Ratio?
Quick Ratio A liquidity metric calculated as (current assets minus inventories) divided by current liabilities, measuring a company’s ability to meet short-term obligations without relying on the sale of inventory.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Quick Ratio” Used in Practice?
A quick ratio below 1.0 may signal that a company could struggle to cover its short-term liabilities without selling inventory.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Quick Ratio?
A liquidity metric calculated as (current assets minus inventories) divided by current liabilities, measuring a company’s ability to meet short-term obligations without relying on the sale of inventory.
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