Click Ratio Name For More Information

• Current Ratio
• EBIT / Interest
• Sales / Receivables
• Sales / Net Fixed Assets
• Cost of Sales / Inventory
• Quick Ratio
• Debt / Worth
• Sales / Working Capital
• Cost of Sales / Payables
• Depreciation / Net Sales
• Officers & Owners Salaries / Net Sales
• Fixed Assets / Tangible Net Worth
• % Profit Before Taxes / Tangible Net Worth
• % Profit Before Taxes / Total Assets
• Net Profit + Depreciation / Current Portion Long Term Debt

Quick Ratio

Also known as the acid test.

What it measures

Similar to the current ratio, this also measures your company's ability to pay its debts.  However, the quick ratio does not include any inventory.  This should be calculated on a monthly basis.

How is the quick ratio calculated

Subtract inventory from current assets (cash, accounts receivable, marketable securities) and divide by current liabilities (bills due within one year).

For example, if your total current assets are $575,000, inventory is $200,000 and current liabilities are $350,000, then the quick ratio is calculated

        (575,000 - 200,000)
        ---------------------    =    1.07
                350,000

Target

The target for the quick ratio is .95

How to improve the quick ratio

The quickest method to improve the quick ratio is to pay down your current bills.  You can also increase your sales which will increase your cash or accounts receivable.