Quick Ratio Meaning & Definition

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Definition of Quick Ratio

Quick Ratio is a measure of corporate liquidity found by subtracting inventory from current assets and dividing the result by the current liabilities.

Applying "Quick Ratio" to Securities Exams:

A fundamental analyst looking at a company will want to understand the how easily a company can meet its current cash requirements. The quick ratio also known as the acid test ratio it a strict measure of a company’s liquidity. By subtracting inventory from current assets the company’s ability to meet its current cash needs is measured only using it most liquid assets.