Quick Ratio Calculator
A Quick Ratio Calculator is a tool used to assess a company’s short-term liquidity and ability to meet its immediate financial obligations. It measures the company’s ability to cover its current liabilities using its most liquid assets.
The formula for calculating the Quick Ratio is: Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities.
For example, if a company has $50,000 in cash, $20,000 in marketable securities, $30,000 in accounts receivable, and $60,000 in current liabilities, the Quick Ratio would be: Quick Ratio = ($50,000 + $20,000 + $30,000) / $60,000 = 1.33.
In this case, the company’s Quick Ratio is 1.33, indicating that it has $1.33 of liquid assets available to cover each dollar of current liabilities. A higher Quick Ratio suggests better short-term liquidity and a lower risk of financial distress.