Quick Ratio

Posted in Finance, Accounting and Economics Terms, Total Reads: 1543

Definition: Quick Ratio

Quick ratio is a type of liquidity ratio. It is a stringent measure of liquidity. It indicates a company’s ability to satisfy its current liabilities with its most liquid assets or Quick assets which include cash, short term marketable instruments and account receivables.


Given below is excerpt of Maruti Suzuki’s 2011 balance sheet




      Sundry Debtors


      Cash and Bank


      Short term inv


      Total Current Assets


      Current Liabilities



Quick Assets of Maruti  = Cash and Bank + Sundry Debtors(Account Receivables) + short term investment

                                                = 2528.1 + 950.2 + 1573.7

                                                = 5052

Quick Ratio         =             Quick Assets/Current Liabilities

                                =             5052/3646.6

                                =             1.3854

Hence, this concludes the definition of Quick Ratio along with its overview.

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