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What are quick ratios?

I need to understand what quick ratios are.

asked by Tegi (6)

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Tags:  business  investing

answers

It is the current assets of a company, less its inventory and divide by current liabilities. The number is designed to show a companies ability to meet it's current obligation in the short term.

7 votes

The quick ratio is calculated by dividing current assets minus inventories by current liabilities. It measures a firm's liquidity and ability to meet its near term obligations.

5 votes

(Current assets - Inventory) / Liabilities. It basically shows if a company can handle its current debts. Higher ratios are better since more assets and less liability equals better financial strength.

4 votes

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