Why is it called the acid-test ratio?

Because it is the harder test of liquidity. It asks whether a company could pay its current liabilities from assets that turn into cash quickly, without selling inventory.

What is a good quick ratio?

A ratio of 1 or more means quick assets cover current liabilities. Whether a lower ratio is a problem depends on how quickly the business turns inventory into cash and when its bills fall due. Compare with your history and your industry rather than a fixed rule.

Why leave out inventory and prepaid expenses?

Inventory has to be sold, and often collected on, before it becomes cash, and a forced sale may not fetch full value. Prepaid expenses, such as rent or insurance paid in advance, won't turn back into cash at all.

Is there another way to calculate it?

Yes: (Current assets − Inventory − Prepaid expenses) ÷ Current liabilities. It gives the same answer when cash, marketable securities, receivables, inventory and prepaid expenses are the only current assets. If there are other current assets, the two versions can differ, so say which one you used.

Free calculator

Quick ratio calculator

Enter cash, marketable securities, receivables and current liabilities from the balance sheet. You get the quick ratio, also called the acid-test ratio, and the quick assets behind it.

Reviewed November 5, 2026. Runs in your browser; nothing you enter is sent anywhere.

Balance sheet and income statement

Cash and cash equivalents

Marketable securities

Short-term investments you could sell quickly.

Accounts receivable, net

Current liabilities

Quick= ($80,000 cash + $20,000 securities + $150,000 receivables) ÷ $300,000 current liabilities

The quick ratio formula

Quick(Cash + Marketable securities + Accounts receivable) ÷ Current liabilities

With $80,000 of cash, $20,000 of marketable securities, $150,000 of receivables and $300,000 of current liabilities, the quick ratio is 0.83: $250,000 of quick assets for $300,000 due within a year.

The same company could still have a current ratio above 1 if it holds a lot of inventory. When the two ratios are far apart, the gap is mostly inventory, so the inventory turnover calculator is the next thing to check. The current ratio calculator runs the broader test.

Quick ratio: questions

Why is it called the acid-test ratio?: Because it is the harder test of liquidity. It asks whether a company could pay its current liabilities from assets that turn into cash quickly, without selling inventory.
What is a good quick ratio?: A ratio of 1 or more means quick assets cover current liabilities. Whether a lower ratio is a problem depends on how quickly the business turns inventory into cash and when its bills fall due. Compare with your history and your industry rather than a fixed rule.
Why leave out inventory and prepaid expenses?: Inventory has to be sold, and often collected on, before it becomes cash, and a forced sale may not fetch full value. Prepaid expenses, such as rent or insurance paid in advance, won't turn back into cash at all.
Is there another way to calculate it?: Yes: (Current assets − Inventory − Prepaid expenses) ÷ Current liabilities. It gives the same answer when cash, marketable securities, receivables, inventory and prepaid expenses are the only current assets. If there are other current assets, the two versions can differ, so say which one you used.

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See the financial ratios cheat sheet for liquidity, activity, leverage and profitability ratios on one page.

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The quick ratio formula

Quick ratio: questions

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