Quick Ratio

Written by Jerry Ratzlaff on . Posted in Manufacturing Engineering

Quick ratio, abbreviated as QR, measures the ability of an individual or business to pay for current liabilities.

 

quick Ratio Formula

\(\large{ QR =  \frac{ C \;+\; MS \;+\; AR }{ CL }   }\)  
\(\large{ QR =  \frac{ CA \;-\; I \;-\; PE }{ CL }   }\)  

Where:

\(\large{ QR }\) = quick ratio

\(\large{ AR }\) = accounts receivable

\(\large{ C }\) = cash & cash equivalents

\(\large{ CA }\) = current assets

\(\large{ CL }\) = current liabilities

\(\large{ I }\) = inventory

\(\large{ MS }\) = marketable securities

\(\large{ PE }\) = prepaid expenses

 

Tags: Equations for Manufacturing