Quick Ratio (Acid Test) Calculator

The quick ratio or acid test calculator is used to evaluate a company's short-term liquidity. In simpler terms, it gives businesses a good idea of their ability to pay off their current liabilities without relying on sales.

Use this free calculator to calculate quick ratio and understand your company's liquidity.

Contact Us

Quick Ratio Calculator

$
$
$
$

*A liquidity score equal to $1 means your business has enough liquid assets to cover its liabilities. Over $1 represents stability and a greater ability to cover potential debts. Under $1 can mean if a company goes bankrupt, it may not be able to pay off some of its debts.

Quick Ratio Frequently Asked Questions (FAQs)

  • What Is a Quick Ratio?

    What Is a Quick Ratio?

    A quick ratio (also called an acid-test ratio) measures a company's ability to pay its short-term debts with its most liquid assets. The quick ratio shows whether a business has enough cash and near-cash resources to cover current liabilities without selling inventory. This financial metric is used by business owners, investors, and lenders in the United States and globally to assess a company's immediate financial health and liquidity position.

  • How To Use the Quick Ratio Calculator?

    How To Use the Quick Ratio Calculator?

    The quick ratio formula is calculated by dividing a company’s most liquid assets by its current liabilities. You can calculate yours by following these steps:

    1. Gather and review your financial statements or get the annual report of the company you’re reviewing.
    2. Find the cash and cash equivalents, accounts receivable, and marketable securities on your balance sheet. Sometimes marketable securities are listed as “investments in financial assets due within one year.” Plug these figures into their corresponding field on the calculator to get the total assets.
    3. Review the current liabilities on your balance sheet, including accounts payable, debt payments, income tax, short-term provisions, and more. If these aren’t already totaled on the balance sheet, add them to get the total current liabilities.
    4. Enter each of these figures into our calculator to quickly discover your quick ratio.
  • How Do You Calculate a Quick Ratio?

    How Do You Calculate a Quick Ratio?

    The equation for calculating quick ratio looks like this:

    1. Calculate Total Quick Assets
      1. Quick Assets = Cash & Cash Equivalents + Marketable Securities + Accounts Receivable
    2. Calculate Quick Ratio
      1. Quick Ratio = Quick Assets / Current Liabilities
    3. Interpret the Result
      1. A ratio greater than 1 suggests the business can cover its short-term liabilities with liquid assets.
      2. A ratio less than 1 could indicate potential cash flow or liquidity issues.
  • What Does a Quick Ratio Tell You/Measure?

    What Does a Quick Ratio Tell You/Measure?

    The quick ratio reveals whether your business can immediately pay short-term obligations without selling inventory or waiting for long-term asset conversion.

    This metric helps identify potential cash flow problems before they become critical, making it essential for financial planning and lending decisions. Unlike other liquidity ratios, the quick ratio provides a conservative, realistic view of your company's ability to handle unexpected expenses or economic downturns.

  • What Is the Industry Average Quick Ratio?

    What Is the Industry Average Quick Ratio?

    The average quick ratio varies by industry, but most healthy businesses maintain a ratio between 1.0 and 1.5, indicating adequate liquidity without excessive idle cash. Compare your quick ratio to industry benchmarks and competitors to accurately assess your company's financial position.

  • How To Improve Quick Ratio?

    How To Improve Quick Ratio?

    Improve your quick ratio by increasing liquid assets, while strategically managing current liabilities. You can also negotiate longer payment terms with suppliers, pay down short-term debt, or delay non-essential purchases to lower current obligations. Small business owners should regularly monitor their quick ratio and implement cash flow management strategies to maintain healthy liquidity levels.

  • What Is the Difference Between the Current Ratio and Quick Ratio?

    What Is the Difference Between the Current Ratio and Quick Ratio?

    The current ratio includes all current assets (including inventory) divided by current liabilities, while the quick ratio excludes inventory and only measures immediately liquid assets.

    The quick ratio provides a more conservative liquidity assessment since inventory may take time to sell or convert to cash. Most financial analysts use both ratios together—the current ratio for overall short-term financial health and the quick ratio for immediate payment capability.