Quick Ratio (Acid-Test Ratio) Calculator

The quick ratio, also called the acid-test ratio, measures whether a company could cover its current liabilities using only its most liquid assets — the ones that can be converted to cash quickly. It starts from current assets and removes the two categories that can't: inventory (which has to be sold first, and may not sell quickly) and prepaid expenses (which were already spent and can't be turned back into cash at all). Quick ratio = (current assets − inventory − prepaid expenses) ÷ current liabilities.

Leave prepaid expenses at 0 if you don't track that figure separately — that reduces the formula to the more commonly cited (current assets − inventory) ÷ current liabilities form, which is the version most textbooks present.

The 1.0 benchmark referenced in the result is a long-standing accounting rule of thumb — a ratio at or above 1.0 means liquid assets alone cover current liabilities — not a specific lender's or industry's actual requirement. Businesses with fast inventory turnover (retailers, restaurants) often run comfortably below 1.0 without it signaling distress, since the current ratio (which doesn't exclude inventory) is a better fit for them.