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How to calculate Quick ratio

The Quick ratio formula, with plain worked examples you can check yourself.

Quick ratio = (CA − Inv) ÷ CL

Worked examples

CA = 600 · Inv = 300 · CL = 300Quick ratio = 1
CA = 180 · Inv = 100 · CL = 100Quick ratio = 0.8
CA = 650 · Inv = 250 · CL = 500Quick ratio = 0.8

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Cash & Liquidity.

Related terms

Cash flowLiquidityWorking capitalOverdraft

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