Quick ratio and supporting figures
This composition excludes inventory and prepaid expenses instead of subtracting an assumed inventory amount from an undifferentiated asset total. Net receivables should reflect relevant collection allowances.
For inventory excluded from this numerator, use the Inventory Turnover Calculator to inspect its separate operating behavior.
The formula
This composition excludes inventory and prepaid expenses instead of subtracting an assumed inventory amount from an undifferentiated asset total. Net receivables should reflect relevant collection allowances.
Worked quick ratio example
Cash of 110,000, short-term investments of 20,000, and net receivables of 30,000 total 160,000 quick assets. Against 100,000 current liabilities, the quick ratio is 1.6× and the surplus is 60,000.
How to use this calculator
- Enter cash and cash equivalents, short-term marketable investments, net accounts receivable.
- Set current liabilities using the stated units or choices.
- Calculate and compare quick ratio, total quick assets, quick assets minus current liabilities.
Choosing inputs for quick ratio
A quick ratio focuses on assets expected to turn into cash without first selling inventory. Enter cash equivalents, marketable short-term investments, and net receivables separately. Property, prepaid insurance, and stock held for sale are excluded from this implementation even if they are part of a broader current-assets total.
Accounts receivable are not identical to cash. Their usefulness for paying bills depends on when customers pay and whether the amounts are collectible. The calculator assumes the receivables amount is already net of relevant allowances and does not inspect invoice ages or customer credit quality.
Interpreting quick ratio
Quick assets minus liabilities expresses the monetary difference, while the ratio expresses relative coverage. A negative difference can indicate limited coverage under these inputs, but payment schedules and operating cash receipts still matter. Compare the composition and timing of quick assets with obligations before interpreting the multiple as a cash guarantee.
Assumptions & limitations
What this calculation assumes
- All balances use the same reporting date and currency.
- Investments are short-term marketable holdings, and receivables are entered net.
What to keep in mind
- Restricted cash, delayed collections, investment price changes, and liability due dates are not assessed.
Common questions
Are prepaid expenses included?
No. The numerator is explicitly cash, marketable short-term investments, and net receivables.
Is a quick ratio above 1 enough to prove bills can be paid?
No. Collection timing and access to those assets can differ from the timing of obligations.
Can I enter all investments?
Only enter short-term marketable holdings appropriate for the quick-asset definition; restricted and long-term investments may not qualify.
Sources & further reading
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