Business tools
Quick Ratio Calculator
Calculate your business quick ratio and quick assets from current assets, inventory, prepaid expenses and current liabilities, and compare the result with your current ratio.
Use this calculator to estimate a company's quick ratio by removing inventory and prepaid expenses from current assets. The quick ratio provides a more conservative view of short-term liquidity than the current ratio. Use figures for the same reporting date and currency. The dollar sign is display formatting, not currency conversion. Inventory and prepaid expenses together must not exceed current assets.
The calculation runs locally in your browser. No input values are saved or sent to a server.
Enter current assets, inventory, prepaid expenses and current liabilities.
Example Quick Ratio Calculation
Static worked example: current assets of $150,000, inventory of $30,000, prepaid expenses of $5,000 and current liabilities of $100,000 produce quick assets of $150,000 − $30,000 − $5,000 = $115,000. Quick ratio = $115,000 / $100,000 = 1.15. Current ratio = $150,000 / $100,000 = 1.50. They differ because inventory and prepaid expenses are excluded. This example is not a calculated result or a financial-health rating.
About this calculator
What Is the Quick Ratio?
The quick ratio, also known as the acid-test ratio, compares quick assets with current liabilities at a reporting date. It presents a more conservative view than the current ratio because inventory and prepaid expenses are excluded from quick assets.
Quick Ratio Formula
Quick Ratio = (Current Assets − Inventory − Prepaid Expenses) / Current Liabilities. Quick Assets = Current Assets − Inventory − Prepaid Expenses. Use the same reporting date and currency. When current liabilities are zero, the conventional quick ratio is unavailable.
What Are Quick Assets?
Quick assets are current assets generally considered more readily available to meet short-term obligations, such as cash, cash equivalents and qualifying receivables. Classification depends on the company and its accounting framework; not all receivables are equally collectible.
Why Is Inventory Excluded?
Inventory may take time to sell, depend on demand or become obsolete, and may not convert to cash at its carrying value. Excluding it gives a stricter measure of short-term liquidity; actual inventory risks vary by business.
Why Are Prepaid Expenses Excluded?
Prepaid expenses typically represent future goods or services, not cash that can be used to settle current liabilities. Accounting classification and individual circumstances may vary.
Quick Ratio vs. Current Ratio
Current Ratio = Current Assets / Current Liabilities. Quick Ratio = Quick Assets / Current Liabilities, with inventory and prepaid expenses excluded from quick assets. The quick ratio will be lower when those excluded amounts are positive and liabilities are nonzero. A difference is not automatically problematic. Use the linked Current Ratio Calculator in Related Tools to calculate the current ratio separately.
Quick Ratio vs. Working Capital
Quick ratio is a relative comparison of quick assets to current liabilities. Net working capital is a dollar amount: Current Assets − Current Liabilities. They answer different questions. Use the Working Capital Calculator in Related Tools to explore working capital.
No Universal Ideal Quick Ratio
There is no universal ideal quick ratio. Liquidity depends on industry, operating model, cash conversion cycle, receivable quality, supplier terms, seasonality and access to financing. A ratio below 1 is not automatically bad and a ratio at or above 1 is not automatically good.
Frequently asked questions
What is the quick ratio?
The quick ratio measures quick assets against current liabilities to provide a stricter view of short-term liquidity than the current ratio.
Is the quick ratio the same as the acid-test ratio?
Yes. Acid-test ratio is another common name for the quick ratio.
How do you calculate the quick ratio?
Subtract inventory and prepaid expenses from current assets, then divide the remainder by current liabilities. If liabilities are zero, the conventional ratio is unavailable.
Why is inventory excluded?
Inventory may take time to sell and may not convert to cash at its carrying value. Its liquidity depends on the type of business and the inventory.
Why are prepaid expenses excluded?
Prepaid expenses generally represent future benefits rather than cash available to settle liabilities.
What does a quick ratio below 1 mean?
Quick assets are below current liabilities based on the entered figures. The company may depend more on inventory conversion, collections, operating cash flow or financing. This does not automatically mean insolvency.
Is a higher quick ratio always better?
No. There is no universal ideal, and the ratio alone does not establish financial health. Industry, cash-flow timing, asset quality and operating conditions matter.
What is the difference between quick ratio and current ratio?
Current ratio includes current assets divided by current liabilities. Quick ratio generally removes inventory and prepaid expenses from the asset numerator before dividing by current liabilities.
What is the difference between quick ratio and working capital?
Quick ratio is a relative liquidity measure. Net working capital is a dollar amount calculated as current assets minus current liabilities.
Can a company operate successfully with a quick ratio below 1?
Some businesses can operate with a quick ratio below 1. Payment timing, customer collections, inventory turnover, supplier terms, operating cash flow and financing all affect liquidity; the ratio alone cannot determine whether that position is sustainable.
Results depend on user-entered values. Asset classifications can vary by company and accounting framework; liquidity also depends on timing and asset quality. The quick ratio is one metric, not a complete assessment of financial condition. This Tool is informational, not accounting, tax, legal, investment or financial advice.