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Q » How do you interpret a company's Quick Ratio (Acid-Test Ratio)?

John

17 Oct, 2025

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A » The Quick Ratio, or Acid-Test Ratio, measures a company's ability to cover its short-term liabilities with its most liquid assets. Calculated by dividing liquid assets (cash, marketable securities, receivables) by current liabilities, a ratio above 1 indicates sufficient liquidity to meet obligations without selling inventory. It provides insight into financial health, emphasizing immediate solvency over inventory reliance.

Michael

17 Oct, 2025

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A »The Quick Ratio, or Acid-Test Ratio, measures a company's ability to meet its short-term obligations using liquid assets. It's calculated by dividing the sum of cash, accounts receivable, and marketable securities by current liabilities. A ratio above 1 indicates a company can meet its short-term obligations, while a ratio below 1 may indicate liquidity issues.

Christopher

17 Oct, 2025

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