Quick Ratio Calculator
Written by Thierno Sadou Diallo, formula verified per our methodology • Last checked on 10/11/2026
The quick ratio is calculated with (current assets − inventory) ÷ current liabilities. For €150,000 of current assets, €50,000 of inventory, and €100,000 of current liabilities, the ratio is 1.
Explanation
The quick ratio, also called the acid-test ratio, measures a company's ability to meet its short-term debts counting only the current assets most easily and quickly converted into cash. It directly complements our already-published current ratio calculator, which uses all current assets (cash, accounts receivable, inventory) in the numerator: the quick ratio specifically excludes inventory from this calculation, since it generally represents the current asset slowest to turn into available cash — it must first be sold, delivered to the customer, and then collected, a delay often much longer than collecting on an already-invoiced receivable. A quick ratio close to or above 1 is generally considered a sign of good short-term financial health, meaning the company can cover its immediate debts without depending on selling its inventory; a ratio well below 1 signals a stronger reliance on actual inventory turnover to meet short-term obligations. The gap between the current ratio and this quick ratio directly reveals how much inventory weighs in the business: a large gap signals an inventory-intensive company (retail, manufacturing), while a small or nonexistent gap (as for a service company) indicates inventory plays a marginal role in the short-term financial structure.
Example: €150,000 current assets, €50,000 inventory, €100,000 current liabilities
Inputs
Current assets: €150,000. Inventory: €50,000. Current liabilities: €100,000.
Calculation
Quick ratio = (150,000 − 50,000) ÷ 100,000 = 100,000 ÷ 100,000 = 1.
Result
This company can exactly cover its short-term debts without relying on selling its inventory.
Frequently asked questions
Why exclude inventory specifically and not accounts receivable?
Because inventory generally needs an extra step before becoming cash: it must first be sold to a customer, whereas an already-invoiced receivable only needs to be collected, with no further sales step. Inventory also carries a devaluation risk (unsold stock, obsolescence) that already-invoiced receivables generally don't carry in the same way.
What's the difference from the current ratio?
The current ratio (see our dedicated calculator) includes all current assets, inventory included, in the numerator. The quick ratio specifically removes inventory from this calculation, making it a more conservative and immediate measure: a company can show a good current ratio while having a disappointing quick ratio, if a large share of its current assets is actually tied up in inventory that's hard to sell quickly.
Is a quick ratio below 1 always a concern?
Not necessarily: some industries normally operate with a quick ratio below 1, particularly when inventory turnover is very fast (food retail, for example), which offsets the apparent reliance on inventory to meet short-term debts. This ratio is best interpreted by comparing it to other companies in the same industry rather than against a universal threshold, or cross-checked against the business's working capital requirement for a fuller picture.