Quick Ratio
A stricter version of the current ratio that excludes inventory, measuring a business's ability to cover short-term liabilities with its most liquid assets.
Also called the acid-test ratio, it’s calculated by dividing cash, cash equivalents, and receivables by current liabilities, deliberately leaving out inventory since inventory can take time to convert into cash.
Lenders sometimes favor the quick ratio over the current ratio for businesses with large or slow-moving inventory, since it gives a more conservative read on true short-term liquidity.
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