Quick Ratio aka Acid Test v2

A liquidity ratio that measures the ability to pay short-term liabilities with cash and assets quickly convertible to cash.

Inventory, prepaid expenses, and other less liquid current assets should be omitted.

(Current Assets – (Inventories + Prepaid Expenses))/Current Liabilities = Quick (Acid-Test) Ratio 

Also known as the accounting Acid Test.

Resource:

• Dopson, Lea R., and David K. Hayes. Managerial Accounting for the Hospitality Industry. Hoboken, NJ: Wiley, 2009. Print.