2 min read
Definition
The quick ratio (acid-test ratio) is current assets minus stock, divided by current liabilities. By excluding inventory — which can be slow to turn into cash — it gives a tougher read on immediate liquidity than the current ratio.
In plain terms
It answers a sharper question: could you pay this year's bills right now, without relying on selling stock? For stock-heavy businesses that's a very different number.
Why it matters for your company
It's especially telling for retailers and manufacturers holding lots of inventory. Read it alongside cash forecasts. See working capital management.
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