Quick Ratio = (Current Assets – Inventories) / Total Current Liabilities
- It shows the ratio of current assets that can be liquidated immediately to short-term liabilities.
- For quick liquidity to be considered satisfactory, the ratio must be greater than 1.
Business actions to improve the ratio
- Increase in Total Assets excluding inventories, i.e. the assets of the Company without a corresponding increase in liabilities
- Reduce Total Liabilities through repayment with New Money (NM)
