What Is the Quick Ratio? Definition and Formula

quick ratio  It is called Quick-Ratio because it measures a business's ability to use its available cash or “quick assets” to immediately pay off its current liabilities - The quick ratio and current ratio are liquidity ratios measuring a company's ability to pay off its short-term liabilities with its short-term assets

Cash $ 20,000 $10,000 Accounts receivable 100,000 70,000 Inventory 70,000 80,000 Other 20,000 20,000 **42 McKeon Company's debt-to-total-asset ratio at 12 The Quick Ratio is helpful in assessing a company's ability to pay off its short-term liabilities to the creditors and evaluate the overall liquidity

Quick Ratio measures the ability of your organization to meet any short-term financial obligations with assets that can be quickly converted into cash  The quick ratio measures a company's ability to pay its current liabilities by readily converting some of its current assets into cash