The Quick ratio measures a company's ability to meet its short-term financial obligations with its liquid short-term assets.

  Calculation Rules
[Cash & Securities+Accounts receivable] / Current Liabilities

The Quick ratio only takes into account those readily-available assets which can be used to meet short term obligations. It ignores less liquid assets like inventory, prepaid or deferred charges. As a result, if the Quick ratio is much lower than the Working capital ratio, it means that current assets are highly dependent on inventory.

When analysing the Quick ratio, one should keep in mind that : - quick assets are meant to represent their book value, which may not always be possible in real life - debtors are meant to fall under quick assets; however different periods of credit may have been granted to different customers, meaning their collection is not uniform. - the span of realization of assets and liquidation of liabilities may be wider than assumed.

Cash Ratio
Cash & Securities
Current Liabilities
Current Ratio

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