Quick Ratio
The quick ratio measures a company’s ability to cover current liabilities using its most liquid assets, excluding inventory. It is used in fundamental analysis as a conservative liquidity measure.
Example: A company has cash and equivalents $5 million, marketable securities $3 million, accounts receivable $7 million, and current liabilities $12 million. Quick ratio = (5 + 3 + 7) / 12 = 1.25.
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