Quick Ratio = (Current Assets – Inventory) ÷ Current Liabilities
So, if you have $30,000 in assets but $10,000 is inventory, and owe $20,000, your quick ratio is 1. That means you’ve got just enough liquid assets to cover debts without sweating it.
But remember, industry matters. A grocery store with high turnover might not freak out over a lower quick ratio. But a bespoke furniture maker? Different story—they need to watch this closely.
Cash Ratio
This one’s the
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