Quick assets ratio

One of the problems with the current assets ratio is that the assets counted include stocks which may or may not be quickly sellable (or which may only be sellable quickly at a lower price).

The quick assets ratio deducts stocks from the current assets, so it is:

(current assets - stocks) ÷ current liabilities

A quick assets ratio of more than one is usually considered enough, but the same caveats apply as with the current assets ratio.

The quick assets ratio is also known as the acid test ratio. This name is used because it is the most demanding of the commonly used tests of short term financial stability.

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