Quick Ratio calculator
Quick Ratio is an indicator of company's short-term liquidity. It measures the ability to use its quick assets (cash and cash equivalents, marketable securities and accounts receivable) to pay its current liabilities. Quick Ratio formula is:
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Interpretation of Quick Ratio
Quick ratio specifies whether the assets that can be quickly converted into cash are sufficient to cover current liabilities. Ideally, quick ratio should be 1:1.
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Definitions and terms used in the Quick Ratio calculator
- Cash: refers to money in the physical form of currency. Cash includes money in the cash pan, petty cash, cash in the locker, bank account and customers' checks.
- Marketable Security: a near-cash (liquid) asset in the form of equity or debt instrument (share/stock, bond or note) that is listed on an exchange and can be readily bought or sold.
- Accounts Receivable: money owed to a company by customers (individuals or corporations) for goods or services that have been delivered or used, but not yet paid for. In it is also known as Sales on credit.
- Current liabilities (short term debt): obligations or debts that are due within one fiscal year or the operating cycle. For example, accounts payable, accrued liabilities, dividends, unpaid taxes and other debts that are due within one year.
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