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Quick Ratio Calculator

Find your quick ratio.

Result

1.40

How it is calculated

The tool computes quick ratio = (current assets − inventory) / current liabilities. Current assets are everything the company expects to turn into cash within a year, inventory is the stock of goods held for sale, and current liabilities are debts due within a year. All three amounts must be in the same currency.

Note that this tool subtracts inventory only from the total you enter. A stricter textbook version also removes prepaid expenses and other items that are hard to cash quickly, so if you want that, leave them out of the current-assets figure yourself. Liabilities must be greater than zero or there is no result. The ratio is shown with two decimals and has no unit.

Worked example

A company has current assets of 500,000, of which 150,000 is inventory, and current liabilities of 250,000. Quick assets are 500,000 − 150,000 = 350,000. Dividing by liabilities gives 350,000 / 250,000 = 1.40. The company holds 1.40 of quickly available assets for every 1.00 of short-term debt.

Try this example →

Common mistakes

  • Entering total assets rather than current assets. Buildings and equipment cannot be turned into cash to pay near-term bills.
  • Putting long-term debt in the liabilities field. Only obligations due within about a year belong there.
  • Comparing a quick ratio across industries with very different inventory habits, such as retail and software.
  • Treating anything above 1 as automatically safe. If most quick assets are receivables that customers pay late, cash can still run short.

About this calculator

The quick ratio, also called the acid-test ratio, measures a company's ability to cover short-term liabilities using only its most liquid assets: (cash + marketable securities + accounts receivable) ÷ current liabilities — deliberately excluding inventory, which can be slow or difficult to convert to cash.

Accountants, lenders, and investors use it as a stricter check than the current ratio when assessing financial health, since a company sitting on a lot of unsold inventory can look solvent by the current ratio while actually struggling to pay bills due in the next few weeks; a quick ratio at or above 1.0 is generally considered healthy.

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