Quick Ratio

The Quick Ratio, also known as the Acid-Test Ratio, is a measure of a company's ability to meet its short-term obligations with its most liquid assets. It is a more stringent test of liquidity than the current ratio as it excludes inventories from current assets. A higher quick ratio indicates a better liquidity position of the company, enhancing its ability to instantly clear off its current liabilities without relying on the sale of inventory.