Which of the Following is Excluded When Calculating Quick Ratio?
The quick ratio, also known as the acid-test ratio, is a crucial liquidity ratio that measures a company’s ability to meet its short-term obligations using its most liquid assets. Understanding which of the following is excluded when calculating quick ratio is essential for a comprehensive understanding of this ratio.
How to Use This Calculator
- Enter the current assets, current liabilities, and quick assets in the respective fields.
- Click the “Calculate” button.
- View the results below the calculator.
Formula & Methodology
The quick ratio is calculated as follows:
Quick Ratio = (Current Assets – Quick Assets) / Current Liabilities
The excluded item in this calculation is:
Quick Assets
Real-World Examples
Data & Statistics
| Company | Current Assets | Current Liabilities | Quick Assets | Quick Ratio |
|---|---|---|---|---|
| Apple | $194.7B | $115.8B | $139.5B | 1.20 |
| Microsoft | $138.6B | $78.7B | $100.5B | 1.28 |
Expert Tips
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Interactive FAQ
What is a good quick ratio?
A quick ratio of 1 or above is generally considered good, indicating that a company has sufficient liquid assets to cover its current liabilities.
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For more information, see the Investopedia guide on quick ratio and the Wadsworth Cengage Learning resource on liquidity ratios.