Significance of Quick Ratio As a rule of thumb the standard quick ratio is 11. Quick ratio Quick assets. Quick ratio Formula Quick assets Quick Liabilities.
Quick ratio Quick assets.
Quick ratio is calculated by dividing liquid current assets by total current liabilities. Quick ratio cash and equivalents marketable securities accounts receivable current liabilities Quick Ratio in Action Seeing the quick ratio calculation in action makes it a little easier to understand. The test measures a companys ability to pay back its bills with business assets that may readily convert to cash. The second formula for calculating a companys quick ratio workings by deducting inventory as well as other prepaid assets from the value of the companys total assets dividing the answer by the value of a companys total current liabilities.