What is Quick Ratio or Acid Test?
The Quick Ratio is a financial ratio used to gauge a company’s liquidity. The Quick Ratio is also known as the Acid Test. The Quick Ratio compares the total amount of cash + marketable securities + accounts receivable to the total amount of current liabilities. i.e. Very liquid assets to bills that need to be paid soon. A Quick Ratio of less than 1.0 is typically the sign of a company with cash flow issues and 2.0+ is that of a healthy company with good cash flow.
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OTHER TERMS BEGINNING WITH "Q"
- Quick Ratio
The Quick Ratio, also known as the Acid-Test Ratio, is a financial ratio used to assess a company's short-term liquidity and ability to meet immediate financial obligations without relying on the sale of inventory. It is a more conservative measure…