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.