Quick Ratio Definition
Define Quick Ratio In Simple Terms
Quick Ratio Formula
1.) C&CE is cash and cash equivalents
2) MS is marketable securities
3.) AR is accounts receivable.
Quick Ratio Example
For example, say that a company has cash and cash equivalents of $5 million, marketable securities worth $3 million, and another $2 million in accounts receivable for a total of $10 million in highly liquid assets.
If the company has $5 million in current liabilities, then its quick ratio is 2.0.