Executive Summary - Quick Ratio

In finance, the acid-test or quick ratio measures the ability of a company to use its near cash or current assets to immediately resolve or retire its current liabilities. Current assets include those assets that can be quickly converted to cash at close to their book values. Such items are cash, cash equivalents such as marketable securities, and debtors. This ratio indicates a company's capacity to maintain operations as usual with current cash or near cash reserves in difficult times.

It is calculated by dividing the Current Assets (without stock) by the Current Liabilities. An outcome larger than 1 shows a healthy balance between the two.