The quick ratio, often referred to as the acid-test ratio, measures a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventory.

The quick ratio, also known as the acid-test ratio, measures a company's ability to pay off its current debt. Current debt includes any liabilities coming due within a year, like accounts payable ...

If your business has quick assets of $20,000 and current liabilities of $25,000 you would divide $20,000 by $25,000 to get the quick ratio of 0.8 -- indicating that you may have trouble paying off ...

Establishing the quick ratio as a core benchmark for micro and small enterprises would represent a timely and strategic move ...

Quick ratio = ($20 - $10) / $25 = 0.20 Relative to Company Y, Company X has a high degree of liquidity with the ability to cover its current liabilities three times over.

Current ratio vs. quick ratio vs. debt-to-equity Other measures of liquidity and solvency that are similar to the current ratio might be more useful, depending on the situation.

The quick ratio can also be contrasted against the current ratio, which is equal to a company's total current assets, including its inventories, divided by its current liabilities.

Evaluating a balance sheet isn't always easy, which is why investors use ratios to measure balance sheet strength. One of the more commonly used ratio is the acid-test ratio, or quick ratio.

What counts is how this particular company's quick ratio stacks up in relation to quick ratios of other companies in the same financial sector. Big tech companies tend to have high P/Es.