What is Quick Ratio?
Liquidity excluding less-liquid inventory.
How to calculate it
Calculate Quick Ratio as: (Current assets − Inventory) / Current liabilities. Pull the inputs from your connected data and track the trend over time in your dashboard.
Examples
Example 1
($600k assets - $100k inventory) / $300k liabilities = 1.67, a stricter liquidity test.
Example 2
With $750k current assets including $150k inventory and $300k liabilities, the quick ratio is ($750k-$150k)/$300k = 2.0, still very healthy.
Why it matters
Quick ratio is a stricter liquidity test that excludes less-liquid inventory, measuring whether the most liquid assets can cover current liabilities. It is especially relevant for businesses with slow-moving or hard-to-sell stock. Because it assumes receivables are readily collectible, it can still overstate liquidity if collections are slow.
Benchmark context
1.0 or above is typically considered safe; service and software businesses with little inventory will naturally sit close to their current ratio.
Common pitfalls
Receivables may not be as liquid as assumed.
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