Home Calculator Quick Ratio Calculator

Quick Ratio Calculator

7
0
Quick Ratio Calculator

Quick Ratio Calculator

The Quick Ratio Calculator helps you assess a company's financial health by calculating its liquidity ratio. The quick ratio measures the ability of a company to cover its short-term obligations with its most liquid assets. This is an important financial metric for businesses.

Quick Ratio Calculator

What is Quick Ratio Calculator?

The Quick Ratio Calculator is a tool that helps you assess the financial health of a business by calculating its liquidity ratio. The quick ratio (also known as the acid-test ratio) measures a company's ability to cover its short-term liabilities with its most liquid assets.

How to Use Quick Ratio Calculator?

To use the Quick Ratio Calculator, simply enter the following values:

  • Current Assets: The assets that can be quickly converted into cash (e.g., cash, accounts receivable).
  • Inventory: The stock of goods or raw materials that can be converted into cash.
  • Current Liabilities: The obligations or debts due within a year (e.g., short-term loans, accounts payable).

Formula of Quick Ratio

The formula for Quick Ratio is:

Quick Ratio = (Current Assets - Inventory) / Current Liabilities

Advantages of Quick Ratio Calculator

  • Helps evaluate the liquidity of a business.
  • Provides insights into the company's ability to pay off short-term liabilities.
  • Simple to use and understand.

Disadvantages of Quick Ratio Calculator

  • Excludes inventory, which can be a significant asset for some businesses.
  • Does not consider the timing of cash inflows and outflows.