Quick ratio
Quick ratio
Glossary of business
Definition of quick ratio
This is another name for the acid test ratio which is the current ratio modified to provide a more prudent measure of short-term liquidity. The acid test or quick ratio is the current ratio with stock and work-in-progress deducted from current assets. It is considered to be a better measure of short-term liquidity than the current ratio as it recognises that stock can be a difficult asset to realise quickly. It is often said that the value of the acid test ratio should be greater than one to ensure that the firm can meet all their short-term liabilities from liquid current assets, but the exact preferred value will depend on the particular industry.
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Terminology about business
Job world
Definition and meaning of quick ratio
Meaning of quick ratio
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