Quick Ratio (Acid-Test Ratio)
Returns the quick ratio for a company, which measures its ability to pay short-term obligations using only the most liquid assets (excluding inventory).
Quick Ratio = (Current Assets - Inventory) / Current Liabilities
Quick Ratio vs Current Ratio
| Ratio | Includes Inventory | Use Case |
|---|---|---|
| Quick Ratio | No | Strict liquidity test |
| Current Ratio | Yes | General liquidity |
Interpretation
| Range | Interpretation |
|---|---|
| > 1.0 | Can pay short-term debts without selling inventory |
| 0.5 - 1.0 | May need to sell some inventory |
| < 0.5 | Potential liquidity concerns |
Notes
- More conservative than current ratio
- Particularly important for companies with slow inventory turnover
- Retailers typically have lower quick ratios
Syntax
=quick_ratio(Symbol)Examples
=quick_ratio("AAPL")=quick_ratio("MSFT")=quick_ratio("WMT")=quick_ratio(A1)When to Use
- Conservative liquidity analysis
- Companies with slow-moving inventory
- Credit analysis and lending decisions
- Comparing liquidity across industries
- Stress-testing financial health
When NOT to Use
| Scenario | Use Instead |
|---|---|
| Need general liquidity measure | current_ratio() |
| Cash-only analysis | cash_ratio() |
| Historical liquidity data | hf_quick_ratio() |
| Service companies (no inventory) | current_ratio() |
Common Issues & FAQ
Why is quick ratio lower than current ratio?
Quick ratio excludes inventory, so it's always less than or equal to current ratio. The difference shows how much liquidity depends on inventory.
Why do retailers have low quick ratios?
Retailers hold significant inventory as part of their business model. A low quick ratio is normal for retail companies.
What if quick ratio and current ratio are similar?
Similar values indicate the company holds little inventory relative to other current assets (common for service companies).
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