Definition
A liquidity ratio measuring a company's ability to meet short-term obligations using only its most liquid assets (excluding inventory and prepaid expenses). More conservative than the current ratio.
Formula
Quick Ratio = (Cash + Short-Term Investments + Accounts Receivable) ÷ Current Liabilities
Example
(Cash $50,000 + AR $80,000) ÷ Current Liabilities $100,000 = Quick Ratio of 1.3