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FINANCIAL RATIOS - Liquidity Ratios

Quick Ratio (Acid Test)


	FINANCIAL RATIOS - Liquidity Ratios
		Net Working Capital to Total Assets
		Current Ratio
		Quick Ratio (Acid Test)
		Liquidity Ratio
		Cash & Equv./Current Assets

Quick Ratio (Acid Test)

Quick ratio (or Acid Test), expresses a company's ability to repay short-term creditors out of its most liquid assets. The quick ratio is the result of dividing the total of current assets, other than stocks, by short-term borrowings. It shows the number of times short-term liabilities are covered by quick assets. If the value is greater than 1.00, it means fully covered.

The formula is as follows:

= (debtors + cash & equivalents + current assets,other) / creditors,short