Quick Ratio Calculator (Acid-Test)
Conduct a rigorous acid-test of your enterprise solvency. Unlike the current ratio, the quick ratio strictly isolates your most liquid assets — cash, marketable securities, and trade receivables — assessing whether immediate liabilities can be covered without relying on inventory liquidation.
Demand deposits, money market funds, and liquid securities
Customer invoice balances collectable within 90 days
Short-term obligations due within 12 months
Quick assets available per dollar of current debt (benchmark: ≥ 1.0)
How to Use This Calculator
- Enter total cash balances, bank deposits, and liquid short-term investments.
- Enter net trade receivables expected to be collected in the near term.
- Enter total current liabilities maturing within 12 months.
- Examine the acid-test ratio: a score of 1.0 or greater indicates solid immediate solvency.
Formula & Calculation Methodology
Deducts physical inventory from current assets to test immediate solvency without forced product sales.
Worked Example
Business holding $60,000 cash and $90,000 receivables against $120,000 current liabilities
Frequently Asked Questions
Why does the acid-test exclude inventory?↓
Physical inventory cannot be converted to cash instantly. Liquidating inventory quickly often requires heavy markdown discounting, and unsold stock may take months to find willing buyers.
What is a good quick ratio benchmark?↓
A quick ratio of 1.0 or higher is generally viewed as safe across financial institutions, indicating that the business has at least one dollar of liquid cash and receivables for every dollar of short-term debt.
Can a company have a high current ratio but a low quick ratio?↓
Yes. Companies with bloated, slow-moving inventory (such as luxury jewelry or boat manufacturers) may exhibit a strong current ratio of 2.5 but a precarious quick ratio of 0.4 if cash and receivables are depleted.
How do lenders view the quick ratio during loan underwriting?↓
Commercial lenders prioritize the quick ratio when assessing revolving credit lines and working capital loans because it demonstrates genuine repayment ability during sudden sales downturns.
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Source Citation & Disclaimer
Informational tool only; not licensed tax, legal, or financial advice.