Quick Ratio Calculator — Acid-Test Ratio
The quick ratio — also called the acid-test ratio — measures whether a company can pay its current liabilities using only its most liquid assets: cash, short-term securities and accounts receivable, deliberately excluding inventory.
Above 1.0 — liquid assets cover current liabilities
- 1
Total quick assets
50,000 + 20,000 + 30,000 = 100,000Cash, short-term securities and receivables — inventory is excluded. - 2
Quick Ratio
100,000 ÷ 80,000 = 1.25
How does this calculator work?
Quick Ratio = (Cash + Securities + Receivables) / Current Liabilities. A result ≥ 1.0 means the company can cover all short-term debts without touching inventory. Enter each asset type and total current liabilities to compute the ratio and see how each liquid asset category contributes.
Formula
How this is calculated
The quick ratio is a stringent liquidity test. Unlike the current ratio, it strips out inventory and prepaid expenses because these may take weeks or months to convert into cash. The numerator — cash and cash equivalents, marketable securities, and net accounts receivable — represents assets that can be realised within 90 days without significant loss of value.
A quick ratio of 1.0 means liquid assets exactly equal current liabilities. Values above 1.0 are generally considered healthy — the company could survive a sudden disruption without selling inventory or taking on new debt. Ratios well above 1.0 may signal excess idle cash; ratios below 1.0 suggest reliance on inventory sales or new financing to meet short-term obligations, which carries refinancing risk.
Context matters enormously: retailers routinely operate at quick ratios below 0.5 because they turn inventory into cash very quickly, while technology companies often hold ratios above 2.0. Compare the result against industry peers and historical trends rather than a single absolute threshold. These inputs come from the current assets and current liabilities sections of a balance sheet.
Frequently asked questions
A ratio at or above 1.0 is typically considered adequate — liquid assets cover all short-term obligations. However, the ideal level varies by industry: capital-light tech firms often target 1.5–3.0, while fast-turning retailers can operate safely at 0.3–0.7. Always benchmark against sector peers.
The current ratio includes inventory and prepaid expenses in the numerator; the quick ratio excludes them. Because inventory may not be quickly convertible to cash at full value, the quick ratio gives a more conservative (and often more revealing) picture of immediate liquidity.
Accounts receivable represent payments already contractually owed to the company, typically collectible within 30–90 days. Inventory, by contrast, must first be sold (often at uncertain prices and timescales) before it becomes cash. The quick ratio counts only assets that convert to cash predictably and quickly.
Also known as
TG we-Calculate Editorial Team. (2026). Quick Ratio Calculator — Acid-Test Ratio [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/quick-ratio-calculator
TG we-Calculate Editorial Team. "Quick Ratio Calculator — Acid-Test Ratio." TG we-Calculate. 2026. https://we-calculate.com/calculator/quick-ratio-calculator.
TG we-Calculate Editorial Team, "Quick Ratio Calculator — Acid-Test Ratio," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/quick-ratio-calculator
@misc{wecalculate_quick_ratio_calculator, title = {Quick Ratio Calculator — Acid-Test Ratio}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/quick-ratio-calculator}}, year = {2026}, note = {TG we-Calculate} }
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